Many events over the past several months have shaken the state of the oil industry. The first part of 2020 saw some surprising increase in oil prices due to the unstable supply, followed by the decision of OPEC countries to reduce the production of oil, thus further blowing up the price of oil in the world market. Unfortunately, there is one event that nobody ever thought would take place this year, which severely impacted the supply and demand ratio of oil and fuel. You probably know what this is: the COVID-19 pandemic.
The effect of the pandemic on the oil industry is something that we have never seen since the Second World War. However, according to the latest reports, oil buyers and refiners have found an opportunity from the pandemic-stricken industry to save the market. For one, refiners are reportedly having a small respite from oil buyers, in which hedge funds and other international oil buyers have begun buying huge amounts of fuel.
Refiners’ Respite From Cheaper Fuel Price May Not Be Enough
Over the past week, oil buyers are said to have focused on buying up to 20 million barrels of US gasoline and diesel, as well the European gasoil. This sounds like a good news to the refiners, although experts believe that this respite is not enough to make their current situation from the pandemic a little better. As the COVID-19 pandemic rages on in hundreds of countries for over 4 months, some nations have decided to lift travel bans in order to let their economies rebound. In this case, there will be a little uptick in transport demand, thus spelling trouble for the refiners.
If ever another serious wave of coronavirus infection is reported in large parts of the world, we can expect that another crippling effect in the oil industry would be felt. With the low prices of fuel in place due to the lower demand for refined oil products, this would affect the supply and demand of fuel once more. However, the effect may not be as bad as in the first part of the pandemic. It is also worth mentioning that there are also other kind of fuel that is readily available today, such as the cleaner and environment-friendly fuels.
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