Oil prices registered their best quarterly performance in 30 years during the three months through to the end of June, staging a dramatic comeback after falling to record lows in April.
Brent crude futures skyrocketed more than 80% in the second quarter. It was the international benchmark’s best quarterly performance since the third quarter of 1990, when it registered gains of 142% during the first Gulf War.
U.S. West Texas Intermediate futures surged 91% in the three months through to end of June, also reflecting the best quarterly performance for U.S. crude since the third quarter of 1990 when it soared 131%.
However, despite notching extraordinary gains in recent weeks, both Brent and WTI futures are still down over 34% since the start of the year.
The IEA’s Executive Director Fatih Birol has reportedly said he believes 2020 may well come to be regarded as the worst year in the history of global oil markets, with April likely to be the worst month the industry has ever seen.
“I think obviously what we saw with the Covid crisis was unprecedented and, in oil markets, it was coupled with the dislocation of the supply agreement between Russia and the OPEC countries at the same time,” Martin Fraenkel, president of S&P Global Platts, told CNBC’s “Squawk Box Europe” on Tuesday.
Those two “massive” events impacting oil prices was “a once-in-a-generation coincidence, so I don’t really expect that again,” Fraenkel said.
Nonetheless, he warned oil price volatility was likely to continue over the coming months, citing “really high” dislocations throughout the global energy sector.
Brent futures did not enter negative territory in late April, but the benchmark did slump to its lowest level since 1999 in a week some Wall Street veterans have since described as: “Scary,” “unbelievable,” and “very visceral.”
“The first half whistle has sounded on 2020 and it already has the makings of a Hollywood blockbuster,” Stephen Brennock, oil analyst at PVM Oil Associates, said in a research note published Wednesday.
“Looking ahead to the rest of the year, U.S. Presidential elections, a year-end Brexit deadline and the evolving Covid pandemic should provide the ingredients for a similarly dramatic sequel,” he added.
Brent crude futures traded at $42.35 on Wednesday morning, up around 2.6% for the session, while U.S. WTI futures stood at $40.35, more than 2.7% higher.
Last month, the IEA said in its closely-watched monthly report that oil demand in the second quarter, which saw the greatest impact from lockdown measures, was 17.8 million barrels per day lower when compared to the same period last year.
That level of demand reduction was slightly less than the group had previously expected, although still unparalleled.
To be sure, the IEA expects the fall in oil demand this year to be the largest in history. More recently, energy giants BP and Shell announced they have both lowered their respective long-term oil price expectations through to 2050.
BP also said it anticipated to incur non-cash impairment charges in the second quarter, estimated to be in an aggregate range of $13 billion to $17.5 billion after tax.
Meanwhile, Shell said on Tuesday that it would write down the value of its assets by up to $22 billion in the second quarter.
The updated forecasts appeared to underline an already bleak longer-term outlook for oil and gas demand and fueled expectations of a slow recovery to the coronavirus pandemic.