oil demand: year of global oil comeback points to greater strength in 2022

NEW YORK: Global oil demand skyrocketed in 2021 as the world began to recover from the coronavirus pandemic, and overall global consumption could potentially hit a new high in 2022 – despite efforts to cut fossil fuel consumption to mitigate climate change.

Gasoline and diesel consumption has jumped this year as consumers resumed travel and business activity resumed. For 2022, crude consumption is expected to reach 99.53 million barrels per day (bpd), up from 96.2 million bpd this year, according to the International Energy Agency. That would be a hair’s breadth from daily consumption of 99.55 million barrels in 2019.

This will put pressure on OPEC and the US shale industry to meet demand – after a year when major producers were surprised by the rebound in activity which overwhelmed supply and led to tight inventories in the whole world. Many OPEC nations have struggled to boost production, while the U.S. shale industry is grappling with investor demands to maintain the spending line.

After starting the year at $52 a barrel, Brent crude climbed to around $86 a barrel before falling at the end of the year. Forecasters say prices could resume their upward trajectory in 2022 unless supply increases more than expected. Bank of America researchers estimate that Brent will average $85 a barrel in 2022, due to low inventories and a lack of spare capacity.

The unknown is the Omicron coronavirus variant, as many countries have reimposed travel restrictions that will hurt the aviation industry and consumerism.

“If this is another wave like the ones we’ve seen before, it’s a negative blow to economic growth in the first quarter of 2022,” said Damien Courvalin, head of energy research at Goldman Sachs. “But if there is a subsequent recovery, oil demand, which briefly touched pre-COVID levels in early November, would then be at new highs for most of 2022.”

The 2021 rebound took suppliers by surprise, increasing tensions between major producing countries and the world’s biggest consumers like the United States, China and India. As gasoline prices rose sharply earlier this year, US President Joe Biden called on the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to increase global production after restricted supply for months.

However, OPEC nations struggled to boost output due to underinvestment as Reuters data showed the group was overly on target for production in November.

Similarly, the US shale industry has not responded to rising prices as it has done before, bowing to pressure from investors to limit spending. Overall U.S. production averaged 11.2 million bpd in 2021, from a record close to 13 million bpd at the end of 2019, according to the U.S. Energy Information Administration.

Canada, Norway, Guyana and Brazil are expected to add supply over the coming year, said senior vice president of analysis at Rystad Energy Claudio Galimberti. U.S. oil production is expected to average 11.9 million bpd for 2022, according to the EIA.


Coronavirus cases are rising due to the highly contagious variant of Omicron, and new outbreaks could slow recovery in major economies. The IEA and others have lowered their expectations slightly, with the IEA cutting its forecast for 2021 and 2022 by an average of 100,000 bpd to account for lower air travel.

“Even 5% of the unvaccinated population can create a crisis,” said Fereidun Fesharaki, chairman of consultancy FGE. “The idea that you can be 70, 80 or 90 per cent vaccinated and be fine is being challenged.”

However, there is still little evidence that Omicron has had a dramatic effect on demand. Fuel stocks at the Amsterdam-Rotterdam-Antwerp (ARA) hub, a major European oil and gas transport hub, have fallen in the most recent week – a sign of stable consumption. Fuel prices are the highest on record in Britain, according to data from motor services firm RAC’s Fuel Watch unit.

In Asia, refinery profit margins for producing gasoline have cooled in recent weeks due to concerns over Omicron demand, but the general expectation for 2022 is for a continued recovery, with higher profits. high for distillates like diesel.

Emerging markets in Asia like Indonesia and Thailand are expected to recover more strongly in 2022, said Peter Lee, principal oil and gas analyst at Fitch Solutions.

Gasoline demand is expected to increase by 350,000 barrels per day in 2022 in Asia, according to Richard Gorry, managing director of JBC Energy Asia.

“The majority of this demand growth will come from India, followed by China,” he said. “But we would even see demand in Japan increase by 30,000 bpd as COVID restrictions gradually dissipate.”

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Felix J. Dixon