Demand growth for refined oil products will never return to the levels it reached before the coronavirus outbreak, Citigroup said. As the global economy restarts, fewer people will fly and use their cars, analysts including Ed Morse wrote. With meetings going virtual and business no longer needing to move employees around the world in the same way as before, there will be powerful forces pushing a transition away from oil, they wrote in a report.
“Oil product demand growth will falter significantly, change its contours and never return to pre-covid-19 rates of growth,” they said. With its more pessimistic take on demand, Citi also cast a warning to those hoping for a return of $100 crude.
Some in the market have been gearing up for such a possibility, they said, driven by spending reductions from major energy companies following the oil price rout and geopolitical risks in some of the world’s major producing nations.