Special Report: Health Crisis Drives Drop in Oil Demand

Overflowing Oil Supply to Reshape Energy Sector; Real Estate Faces Local Effects, but Some Benefits Will Emerge

April, 2020

Oil demand tumbles under quarantine, sending prices negative. The global health crisis has idled factories and stalled businesses, leading to a historic fall in oil consumption at a time when production was at an all-time high. Petroleum consumption in the U.S. dropped to its lowest level in 30 years in early April, while demand for gasoline was cut by almost half from mid-March. Lower prices typically trigger savings for U.S. consumers and fuel-burning businesses, though as quarantines continue across the nation, many are currently unable to benefit.

Report Highlights:

• Oil prices briefly fell into negative territory for the first time on April 20 as suppliers overshot storage capacity. The world's oil producers have been unable to shut wells fast enough to adapt to the pandemic-driven decline in consumption, now at its lowest level in 30 years.

• Plans are forthcoming for government funds to be directed at the embattled oil and gas industry, which may come at the cost of federal ownership of companies or their crude reserves.

• Lower fuel prices will likely remain in place until the economy ramps back up, benefiting downstream firms and consumers.