StanChart widens oil demand loss forecasts citing lockdowns

FILE PHOTO: The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas, U.S. November 24, 2019. REUTERS/Angus Mordant

(Reuters) - Standard Chartered expects oil demand in April to fall by 18.5 million barrels per day (bpd) year on year, deepening its previous forecast of a 10.5 million bpd fall, citing global lockdowns prompted by the coronavirus.

It now sees demand for 2020 falling by a record 5.43 million bpd on average.

“Tighter mobility restrictions as part of government coronavirus responses have worsened our outlook on the oil demand shock,” the bank’s analysts said in a note.

It expects a market surplus of 21.8 million bpd in April, one of 19.5 million bpd in May, and one of 13.7 million bpd in June.

“We calculate that these inventory builds will exhaust spare storage in mid-May. Balancing the market would require an unprecedented shutdown of output by operators, which is unlikely without significantly lower prices,” the bank said.

The bank currently sees Brent crude averaging $23 per barrel in the second quarter.

Brent was trading up by 30 cents, or 1.3%, at $23.06 per barrel by 0635 GMT, after closing on Monday at $22.76, its lowest finish since November 2002.

Reporting by K. Sathya Narayanan in Bengaluru; editing by Jason Neely