SINGAPORE (June 4): As markets begin to reopen from Covid-19 lockdowns, demand for crude oil has rallied ahead of expectations. Brent crude oil prices stood at US$39 ($54.64) per barrel at the time of writing, which is more than double recent lows of around US$19 a barrel recorded at the end of April. 

“Demand destruction due to the COVID-19 pandemic response did peak in April as we had expected, but easing of lockdown restrictions in some parts of the world ahead of the infection rates peaking out has meant that oil demand recovery could be faster than we had earlier anticipated,” say DBS analysts Suvro Sakar, Jason Sum, and Ho Pei Hwa. Oil production cuts by approximately 15.0 mmbpd m-o-m have also eased pressure on oil storage facilities. 

The analysts have revised global oil demand projections upwards from a decline of 11.0mmbpd  to a decline of 9.0mmbpd in 2020, with supplies expected to fall around 7.0mmbpd. These predictions have accounted for production cuts by OPEC+ as well as large non-OPEC producers like the US and Canada, with demand-supply balance expected for end of 3Q20. 

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