3. The wild numbers behind oil
Here’s a stat that would have been jaw-dropping before everything changed: The International Energy Agency sees oil demand surging by an unprecedented 5.7 million barrels per day (bpd) next year, but even that would leave it 2.4 million bpd below 2019 levels.
Why it matters: This morning's report is the first time that IEA's closely watched, detailed monthly market analysis has looked ahead to 2021.
- IEA sees a major return to activity (which is already underway), but also expects the collapse in air travel will drag on oil demand until 2022 — or even well beyond.
- The sharply lower demand projected in 2021 compared to the pre-COVID era of 2019 is "largely explained by the dire situation of the aviation sector," IEA notes, citing industry estimates that passenger traffic will still be down about 55%.
Where it stands: Prices were up this morning, with Brent trading around $41.16 and WTI at $38.65.
The big picture: IEA also now sees global demand down 8.1 million barrels per day this year compared to 2019, which is an unprecedented collapse but not quite as steep as they had once projected.
- "While the oil market remains fragile, the recent modest recovery in prices suggests that the first half of 2020 is ending on a more optimistic note," IEA said.
- "If recent trends in production are maintained and demand does recover, the market will be on a more stable footing by the end of the second half," they said, citing production cuts by OPEC+ and other nations.
But, but, but: Take these recovery estimates with a grain of salt. Or chunks of salt. "[W]e should not underestimate the enormous uncertainties," IEA said.
Speaking of oil and gas, the Pittsburgh Post-Gazette reports: "Pennsylvania’s Office of Attorney General is charging Cabot Oil and Gas for environmental crimes related to one of the most notorious cases of water contamination from Marcellus Shale drilling in the state."