Crude oil markets: reality vs. expectations

Back in April, when the world was immersing into the first lockdown due to overwhelming spread of COVID-19, we developed three scenarios of how the oil industry might develop in the future, given wide range of potential developments.

It is now interesting to see how the reality would play against the scenarios. You can see the overview of the scenarios on Picture 1. Basically, key differentiators are the factors most effecting performance of the industry in monetary and physical terms — crude price and crude demand in from of refining volumes.

Pic 1. Overview of industry development scenarios (as of April)

It was clear that the realization of scenarios would be dependent on several uncertain factors that have not been, unfortunately, cleared until now — how quickly the virus would spread, how effective lockdowns could be, how quickly an effective treatment could be developed, and if there would be an effective vaccine.

In the last six months, we have seen different answers to these questions — at one point it seemed that the virus had been contained and economy was bound to quickly recover (summer), but now it is obvious that there is still more time needed until the solution is found and implemented.

So, it is interesting to see how these developments have been reflected in the key metrics along…