Global oil demand to reach pre-Covid levels in 2022, Auto News, ET Auto
Singapore:Global fuel demand is expected to reach pre-pandemic levels by early next year as the economy ignores pandemic woes, but unused refining capacity is expected to weigh on the outlook, said Monday oil producers and traders.
While a persistent increase in Covid-19 infections in several markets has hampered the recovery in demand for some refined products such as jet fuel, gasoline and diesel consumption trends indicate higher growth, said industry leaders. They were speaking at the Platts APPEC 2021 conference being held this year in a hybrid format, including both in-person and virtual attendees.
“We have seen refining margins rebound as demand rebounded… But overall for the world there is still a lot of spare capacity and a lot of capacity has been taken out,” said Eugene Leong, president of BP Singapore and CEO of BP trading. & Asia-Pacific & Middle East shipping arm.
“The reserve (refining) capacity is likely to act as a small cap on the margins,” he said in a pre-recorded speech for the conference. “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 completed two new crude units earlier 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. .
However, the recovery in demand is expected to increase profits for refiners and create more room for return production or new production.
Brent crude futures have jumped over 50% this year to their highest level since October 2018, helped by a pickup in fuel demand as well as tighter supplies from the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, a group known as OPEC +.
U.S. oil and gas producer Hess Corp expects global demand to reach pre-pandemic levels of 100 million barrels per day (bpd) by the end of this year or early 2022 , said its president, Greg Hill. The International Energy Agency (IEA) also forecast a strong rebound from the fourth quarter, citing “strong pent-up demand and continued progress in immunization programs.”
He expects global oil demand to average 96.1 million b / d in 2021 and 99.4 million b / d in 2022, up from 90.9 million b / d in 2020. Opec expects an average demand of 99.70 million bpd in the fourth quarter of 2021.
Meanwhile, private Indian refiner Nayara Energy hopes to operate its 400,000 barrels per day (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.
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