22 Apr 2020 18:43

World currently in most active stage of declining oil demand - 20-30 mln bpd - Novak

MOSCOW. April 22 (Interfax) - The world is currently in the most active stage of declining demand for oil, with demand down 20-30 million bpd, according to various estimates, Russian Energy Minister Alexander Novak said during a meeting with the leaders of State Duma parties.

"At the moment we are in the most active stage of declining global demand for oil, and we're talking about 20-30 million bpd," Novak said, adding that the situation would improve as quarantine restrictions are lifted.

"Of course, this moment today is the deepest - the decline in demand, but nevertheless it will not be constant, we hope that as restrictive measures are lifted, demand will grow, and this should stabilize the situation in oil markets," he said, noting the important of the OPEC+ decision to cut production in this regard.

He recalled that, according to Energy Ministry estimates, in conjunction with OPEC+ countries' production cuts of 9.7 million bpd, more than 10 G20 countries could reduce oil production, including due to the fall in oil prices, and in May around 15-20 million bpd of oil could leave the market.

"The situation is rather volatile, markets have never been in this situation, and there are many speculative aspects, including in futures contract trading - these are largely paper contract, and the volumes of these contracts being traded even exceeds oil being produced," the minister said.

"It's forecast that oil storage facilities around the world will filled to capacity around the world. Given the fact that oil markets are still local, we have seen serious volatility in WTI oil prices in recent days," he added, noting that this is due to the U.S. situation in the market, where there is little storage capacity and little ability to send oil to other markets. "As a result, at the closure of May futures, there was even a negative price for WTI in the last hours of trading," Novak recalled.

"In my view, this volatile situation will continue for some time, until the OPEC+ deal enters into force on May 1 and measures aimed at reducing quarantine restrictions are implemented, that is until demand begins recovering," the minister said.