Sign Up for FREE Daily Energy News
  • Stay Connected
  • linkedin
  • twitter
  • facebook
  • youtube2

Hazloc Heaters
Hazloc Heaters

Goldman Sees U.S., Russian Oil Most Vulnerable to Demand Crash

English Español 简体中文 हिन्दी Português
These translations are done via Google Translate

By Sharon Cho

(Bloomberg) Oil demand is getting hammered at a faster pace than anyone had predicted and landlocked crude production in the U.S., Russia and Canada is most vulnerable, according to Goldman Sachs Group Inc.

Consumption will drop by 26 million barrels, or 25%, this week as social-distancing measures to contain the coronavirus now impact 92% of global GDP, analysts including Jeff Currie and Damien Courvalin said in a note. There’s been at least 900,000 barrels a day of announced shut-ins at the wellhead, with the true number likely higher and growing by the hour, they said.

“The ultimate magnitude of these shut-ins, which is still unknown, will likely permanently alter the energy industry and its geopolitics,” the analysts said. Landlocked crude prices are heading into negative territory and will eventually create an inflationary oil supply shock because so much production will have been halted, they said.

Brent crude will likely stay near cash costs of $20 a barrel with temporary downward spikes as waterborne varieties are better positioned compared with landlocked oil in the U.S., Canada and Russia that’s sitting behind pipelines, Goldman said. Shut-ins will be not be based upon where wells sit on the cost curve but rather on logistics and access, it said.

The current oil crisis will see the energy industry finally achieve the restructuring it so badly needs, although a push for de-carbonization from capital markets may hamper the broad investment required for a recovery, the analysts said.

Share This:

More News Articles

New SHOWCASE Directory Companies


RAM Industries Inc.
RHK Hydraulic Cylinder Services Inc.