Macro: COVID-19 Oil Market Update Part 2: After the storm the second wave?

The turbulence of recent weeks has eased somewhat on the oil market, at least compared with the months before, although the implied volatility remains elevated. This is mainly due to two factors: Firstly, the situation around the Covid-19 pandemic has eased to a large extent - at least in some countries - especially if one looks to East Asia and Western Europe. In many areas of public life, a return to normality has taken place, and with it a resurgence in demand for crude oil and crude oil products. Even if this development is generally positive, we are still a long way from the demand levels we saw in 2019. Demand in China, for example, is again roughly 90 % of the previous year's levels.
In fact, thanks to factors such as a prolonged slump in air traffic until 2021, a permanently increased share of home office capacity in the developed economies and the inventories built up to date, the recovery in demand to pre-Covid 19 levels is likely to last at least until the second half of 2021.

This Research was produced and first published by Raiffeisen Bank International AG which is supervised by the Austrian Financial Market Authority and the National Bank of Austria.