Rystad Energy’s investigation into real-time traffic awareness in Europe revealed that the destruction of road fuel during the existing wave of Covid-19-related locks will be limited to only 900,000 barrels consistent with the day (bpd) until November 2020. compared to the same period in 2019. The effect is less than in April, as this blockade is less extensive and Europeans comply less with restrictions than before. A third thing that contributes is that other people are more reluctant to use public transport because of the inherent threat of infection, who prefer to use vehicles consistent with their own.
In April 2020, the peak month of the first European roadblock wave, road fuel demand fell by almost 40% until April 2019, from 7. 4 million b/d to just 4. 7 million b/d, a shocking difference of 2. 7 million b/re.
This time, as European governments walk a thin line between fighting the virus and protecting its economies, blockades have been imposed less seriously than the surprise treatment prescribed in April. This meant that fuel was ordered for the roads in November to avoid heavy rain. However, it turns out that markets see a genuine call to resilience this time.
Rystad Energy’s mobility rigour index shows that restrictions imposed lately in Europe, if they had had a good reputation, have led to a 20-30% drop in activity. about 12%, predicting that the demand for fuel for November roads will fall to 6. 3 million b/d from 7. 2 million b/d in November 2019.
Despite its limited effect, this decline in demand is counterstational and will limit the recovery in global oil demand by November-December 2020; it can also continue to suppress expansion in the first months of 2021. imposed in Europe and globally, there is an additional threat of declining demand for oil, which would likely lead to a response from the source.
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We hope that the negative call to the trend in Europe is empirically powerful enough that OPEC will be noticed as something serious when the alliance meets on November 30 and December 1, 2020 to discuss the possibility of further cuts. production in 2021.
In addition, it should be noted that even in the spaces where the strictest locks were implemented in the first wave, the call for road fuels has not been completely frozen, in some cases car traffic was allowed in special cases, such as emergencies or essential movements of workers and, in general, the demand for fuel for the roads was supported through trucks.
It remains to be seen how long the existing blockade will last, as this will have the epidemiological scenario in the country, but top European governments hope to lift strict measures before Christmas to inject some degree of festive stimulus into their suffering economies.
Although the restrictions may simply be eased if a potential vaccination crusade in Europe were to quickly take position, the existing lockdowns could last until 1Q21 if cases continue to increase, posing a threat of further declines for the European call for titles in December and January a threat that deserves not to be swept away by market position in the coming months.
Rystad Energy has developed a mobility rigor index, where one hundred corresponds to the general impossibility of using any type of transport and 0 to no mobility restriction. The index shows that the measures that are being implemented lately in Europe are only as strict as the first wave of coronavirus brought them.
By Rystad Energy
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