Tightening the belt

摘要

It is a challenging time indeed for the energy industry. At the end of 2019 there were already signs of oversupply with US shale prices under pressure, but as countries locked down in early 2020 because of COVID-19, oil and gas demand fell very sharply. In April, when 4bn people worldwide were under some sort of restriction, energy demand was down by 25mn b/d - globally, road transport activity fell by 50% and air passenger traffic was down 90%. On the supply side, the OPEC+ talks collapsed in early March, with Saudi Arabia and Russia then announcing production increases, causing oil prices to crash by nearly a third. Oil prices continued to fall as demand plummeted and storage for oil and gas got close to capacity. Tanker rates rose as they were used as floating storage. For the first time in history, West Texas Intermediate (WTI) traded below zero on 20 April.