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    Crude Oil Market to Stay on Gloomy Outlook
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    Image Courtesy : https://www.fxempire.com

    Although efforts are on by OPEC (Organisation of the Petroleum Exporting Countries) countries, the crude oil market continues to be vulnerable amid covid 19. The market and outlook are gloomy and the sector is taking a big hit with no silver line soon.

    According to US-based Energy Information Administration (EIA), over forty public listed US oil producers wrote an accumulated $48 billion worth of the value of their assets in the first quarter of 2020.

    Recent report bu Deloitte says that the collapse in crude oil prices and the economic slowdown could cause demand crash in Q2 and this could prompt shale drillers of USA to aggregate downsizing asset values by $300 billion. Debts of some firms could become unsustainable, which could lead them to insolvencies and consolidation in the sector. Oil giant Shell has cut its dividend for the first time since world war II. This shows the agony of this sector, which is crippled with multiple economic setbacks across the globe.

    Several global oil companies have reported sluggish growth and dip in their net profit, some have reported the loss in the net revenue itself. Interestingly, the assumptions were not just based on the bloodbath the markets experienced so far. Rather, most of these were based on expectations of lower oil and gas prices for the next 30 years.

    Analysts are of the opinion that this is not just because of covid 19, rather these are long term and decade-old market dynamics. The oil industry will remain and it will not go away. But the long-term decline that is onboard will continue to a few decades. According to Nikki Reisch, Director of the Center for International Environmental Law's Climate & Energy Programme, "The game is up: Oil and gas companies can no longer mask their financial frailty".

    Saudi Arabia, the world's largest crude exporter, posted a budgetary deficit of $29.12 billion for the second quarter of this year. As per Saudi Ministry of Finance, second-quarter oil revenues fell by 45 per cent year-on-year to $25.5 billion, while revenues dropped 49 per cent to nearly $36 billion.

    Despite the efforts of OPEC and its allies to open up taps from August, the market scenario does not support their plans. Analysts say that the glut in the market is strong and it well beyond the assumptions of the sector. Rystad Energy said in a recent analysis of the markets. The upcoming partial return of curtailed Opec+ oil production from August is set to create a new four-month supply glut of around 170 million barrels, the report underlined.

    The covid 19 impact is still alive, and it is expected to continue until the end of 2020. The aviation industry is in a standstill, the demand for aviation fuel is will not grow until its full-fledged operation across the globe. According to industry experts, we will have to wait till 2023 to see aviation sector to be in action. The pandemic has changed people behaviour which could affect their travelling interests. This has sent alarming bell to oil producers and crude oil producers.

    The pandemic has not only eliminated the plans of oil giants, but it has also kept analysts and experts mum and finger crossed as they are not able to give appropriate market predictions.

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    TAGS:Crude Oil Market Saudi Aramco Oil Market Shale Gas Oil Price Aviation Industry 
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