oil consumption in the USA fell sharply against the background of the spread of coronavirus. The decline in demand for fuel has led to the fact that the traditional supplier of oil to the United States — Canada — have actually lost their key market. About it reports Bloomberg.
While world oil prices were high, but the demand is stable, canadian companies such as Enbridge Inc. and Energy Corp, tried to expand the capacity of their pipelines, to deliver crude oil to the U.S. market in large volumes. Both companies planned the launch of new pipelines, but the deadline was repeatedly postponed. The peak of the problem came at the end of 2018, when the authorities of the province of Alberta had to demand from local producers of production cuts.
Coronavirus radically changed the status quo of the American market can not cope with their own prey. Against this background, canadian oil is in demand, even despite the fact that some varieties, such as heavy Western Canadian Select traded at a large discount relative to WTI. New realities call into question the export of canadian oil to the U.S., and once clogged pipelines now is unclaimed.
Pandemic coronavirus sharp blow to the oil market — the quarantine has fallen off the sale of gasoline, and stopping the industry has hit the demand for petroleum products.
According to the estimates of international institutions, oil production exceeds demand by about 25 million barrels per day. The glut of oil on the market collapsed prices and forced the country’s leading oil producers to meet in an emergency meeting to reduce production levels.
the meeting was the agreement between the OPEC and the countries “big twenty”, according to which the parties undertake to reduce aggregate production by 15-20 million barrels per day. However, experts insist that even such a large-scale reduction in production levels will be insufficient to avoid further price declines.