IEA sees global throughput down by 7.6mn b/d in 2020

The IEA said today that global refining throughput will fall by 7.6mn b/d year-on-year in 2020, to its lowest in a decade at 74.3mn b/d, and said that product stockbuilds are inevitable.

The forecast, made in the IEA's latest Oil Market Report, is a sharp downward revision from its previous estimate for a throughput fall of just 0.4mn b/d.

Run cuts are concentrated in OECD countries, where the IEA revised down total throughput to 33.3mn b/d from 37.9mn b/d in its previous report. Its estimates for Europe and the Americas are both lower by around 2mn b/d. It revised down its estimate for total non-OECD runs by 2.6mn b/d to 41mn b/d, with its Chinese runs forecast just 200,000 b/d lower on the year compared with the previous report.

Runs will trough in the second quarter and reach a nadir in April, the IEA said. In order to avoid product inventory builds in that quarter runs would need to drop below 60mn b/d, or 20mn b/d down on the year — a level the IEA deemed unfeasible, as this would require a 16mn b/d crude stock build. So, it forecasts crude runs to fall by 17mn b/d year on year in the second quarter, resulting in a crude stock build of 12mn b/d and a product stock build of around 6mn b/d.

The lower runs are reflective of drastically reduced oil demand caused by widespread lockdown measures imposed to contain the Covid-19 pandemic. Total oil demand will fall by 9.3mn b/d on the year, the IEA said, of which refined products account for 8.5mn b/d. Fuel demand fell by 10.8mn b/d year-on-year in March, the IEA said, and it said demand will begin to rise from June as Covid-19 containment measures are lifted.

It expects demand to fall mostly for gasoline, middle distillate, and jet fuel. Global gasoline demand will fall by 11.2mn b/d in April, the largest monthly decrease ever recorded, and will fall by 10mn b/d year on year in May. It forecasts demand in the UK, Germany, and France to fall by 70pc, in the US by 45pc and in India by 55pc, all in April. Overall global consumption will fall by 2.9mn b/d, or 11pc, in 2020, the IEA said.

It expects jet fuel demand to decrease by 20pc in the second half, and by 26pc in the year as a whole. Its forecast for gasoil and diesel demand is for a fall of 8.6mn b/d in April and of 7.8mn b/d in May, and for 2020 consumption to fall by 2mn b/d, or 7pc.

The IEA said that diesel demand is cushioned somewhat from the effect of lockdown measures because of the substantial share used in the freight and manufacturing sectors, which it said should "bounce back relatively fast". It sees diesel demand above year-ago levels by August, with lower diesel use from road transport offset by the impact of rules on sulphur limits in bunker fuels.

By Harry Riley-Gould

source: Argus Media