Morgan Stanley says that the Global Oil demand will take until last quarter of 2021 to recover to its 2019 level as countries emerge slowly from the corona virus crisis. This state was issued on Wednesday.
The oil demand is expected to plummet by nearly 30 million barrels per day in the fourth month of the year. The IEA’s latest oil Market Report painted a dire potrait of global demand. But at the same time it believe that there is resurgence in demand close to 2019 levels by the end of the year. However, the scenario may not come to pass. Many forecasts, still assume the global economy rebounds street the second quarter.
But there are several explanations as to why the global economy may not return to normal levels by the end of 2020. One of the major reasons is that the infections are still on a rise. Covid 19 is still ahead of us. The second reason is that global economies have crashed to inexplicable levels. The working paper from the national Bureau of economic research says that US GDP could contract by 11% in the fourth quarter of 2020. The world right now is facing the worst downturn since the Great Depression in the 1930s. The IMF chief economist,Gita Gopinath, has also said that “the magnitude and speed of collapse in activity that has followed is unlike anything experienced in our lifetimes. ”
The Wall Street bank expects benchmark US oil prices to stabilise at approximately $40 per barrel Next year. Similarly, Brent crude prices are expected to settle at nearly $45 a barrel. Based on the hopes that there will be a V shaped bounce back. However, there is still a chance that the assumptions of v shaped recovery all go in vain in the next two months, which would reset the expectations for the next year or two.