The International Energy Agency's monthly market analysis released Thursday says global oil demand will fall by 435,000 barrels per day during this quarter compared to the same period a year ago.
Why it matters: It's the first quarterly contraction in over a decade.
- The agency also revised its total 2020 demand growth figure. They now see global oil thirst growing by 825,000 barrels per day this year, which is 365,000 lower than their previous forecast.
- That would be the smallest expansion since 2011, as the IEA noted "significant" market consequences from the tragedy.
The big picture: The report underscores something we highlighted last week — China's enormous influence on global energy markets and the spillover effect when travel and economic activist is curtailed. Last year China accounted for over three-quarters of global demand growth, IEA notes.
- "While the SARS epidemic of 2003 is widely used as a reference point for analysis of COVID-19, China has changed enormously since then."
- "Today, it is central to global supply chains and there has been an enormous increase in travel to and from the country, thus heightening the risk of the virus spreading."
But, but, but: While today's report puts a highlighter pen over all this, crude markets have already priced in a lot of the demand shock.
- Crude prices have tumbled sharply over the last few weeks to their lowest levels since early last year as the outbreak worsened, but have made up some ground in recent days.