APPEC-Global oil demand expected to reach pre-pandemic levels by early 2022 | Invest News
By Koustav Samanta, Roslan Khasawneh and Florence Tan
SINGAPORE (Reuters) – Global oil demand is expected to reach pre-pandemic levels early next year as the economy recovers, although unused refining capacity may weigh on the outlook, said Monday producers and traders at an industry conference.
The outlook is in line with a bullish forecast https://www.reuters.com/business/energy/vaccines-set-unleash-pent-up-oil-demand-iea-2021-09-14 from the Petroleum Country Organization exporters (OPEC), but ahead of estimates from the International Energy Agency (IEA).
Global demand is expected to reach 100 million barrels per day https://www.reuters.com/business/energy/appechess-sees-oil-demand-climbing-100-mln-bpd-by-year-end-or-early -2022-2021-09-27 (bpd) by the end of 2021 or in the first quarter of 2022, said Hess Corp president Greg Hill.
The world consumed 99.7 million barrels per day of oil in 2019, according to the IEA, before the COVID-19 pandemic hammered economic activities and demand for fuel.
While a persistent increase in COVID-19 cases in all markets has hampered the recovery in demand for some refined products such as jet fuel, gasoline and diesel consumption trends indicate growth, noted the industry leaders at the Platts APPEC 2021 conference.
“We have witnessed a strong destruction of demand due to reduced economic activity, disruption of transport, disruption of the free flow of goods… But it has overtaken us,” said Alan Heng, acting CEO of Pavilion Energy in Singapore.
“We are facing the post-pandemic period and we are learning to live with the virus… The demand for energy has started to increase and this is good news for us.”
Recovering demand is expected to boost profits for refiners and create room for return or new production, but experts warn unused refining capacity will be a drag.
“There is still a lot of unused capacity and a lot of capacity has been taken out,” said Eugene Leong, president of BP Singapore and CEO of BP’s trade and shipping business in Asia-Pacific and the Middle East.
“The reserve (refining) capacity is probably going to act as a small cap on the margins,” he said.
“This year alone we’ve seen mega refining (and) petrochemical complexes start up, so I think that’s going to be a challenge for refining.”
In China, the new mega-refiner Shenghong Petrochemical is expected to begin test operations soon, while Zhejiang Petrochemical has completed two new crude units this year.
Malaysian company Petronas also hopes to restart operations of its 300,000 bpd refinery-petrochemical complex with Saudi Aramco by the end of the year, said Arif Mahmood, executive vice president and CEO of downstream Petronas. .
Brent crude futures have jumped more than 50% this year to their highest level since October 2018, helped by a recovery in fuel demand and a tightening of supplies to OPEC and its allies, including Russia, a group known as OPEC +. [O/R]
Goldman Sachs expects oil prices to hit $ 90 a barrel https://www.reuters.com/business/energy/goldman-expects-oil-prices-hit-90-by-year-end-supply -tightens-2021-09- 27 by the end of the year. Prices are now under $ 80.
OPEC predicts an average global oil demand of 100.8 million bpd in 2022, exceeding pre-pandemic levels, while the IEA expects an average of 96.1 million bpd in 2021 and 99.4 million bpd in 2022, compared to 90.9 million bpd in 2020.
Indian refiner Nayara Energy hopes to operate its 400,000 bpd refinery at nearly 100% capacity in 2021 as fuel demand increases, CEO Alois Virag said.
India’s fuel demand is expected to increase 9% to 11% as its economy is “geared towards higher growth” after the second wave of COVID-19 infections eases, he said. declared.
“Regarding the refining of petroleum products, we remain cautious,” said Arif of Petronas, adding that travel restrictions continue to weigh on the recovery in demand for aviation fuel.
“We will see a recovery hopefully towards the end of this year, early next year,” Arif said, adding “there is an oversupply of refining capacity.”
However, in the longer term, a global push to electrify road transport to reduce carbon emissions could halve the demand for global oil refining capacity by 2050, according to consultancy Rystad Energy.
(Reporting by Florence Tan, Koustav Samanta, Roslan Khasawneh and Jessica Jaganathan in Singapore, Sonali Paul in Melbourne and Nidhi Verma in New Delhi; edited by Himani Sarkar)
Copyright 2021 Thomson Reuters.