Crude Oil Demand May See Largest Quarterly Decline in History

Due to the rapid-evolving public health emergency around the globe, the daily demand for crude oil will decrease by 3.8 million barrels year-on-year. Prior to this, Goldman Sachs had been the first among Wall Street's major investment banks to predict a sharp decline in crude oil consumption this quarter. The unprecedented drop of demand came as a sudden shock.

Such a huge shock on crude oil demand also highlights the challenge facing OPEC and its allies, who will meet in Vienna to discuss how to boost oil price that have fallen by more than 20% in the year. Saudi Arabia proposed to reduce daily output by as much as 1.5 million barrels, while Russia intended to maintain the current scale of production cut until the end of June. The last record decline of global oil demand was in 2009, when daily demand fell by 3.6 million barrels.

Goldman Sachs estimates daily crude oil demand will decline by 150,000 barrels this quarter, while energy FGE, a consulting firm from the energy industry, expected daily oil demand to drop 220,000 barrels.

In light of OPEC's past production reductions under the impact of falling demand, the reverse of the oil price slump will still depend on the support of macroeconomic situation. The current situation is obviously not very optimistic. We expect the decline of global crude oil demand this quarter to reach a record level.