BAKU, Azerbaijan, June 5
By Leman Zeynalova – Trend:
Oil demand is expected to increase significantly in 2021 on the back of a recovering global economy, Trend reports citing Wood Mackenzie research and consulting company.
“We’re already into the early stages of recovery and the outlook is promising as China, the US and Europe emerge from lockdown. Gasoline demand is bouncing strongly. Jet fuel will be much slower, with global flight activity suppressed by restrictions on travel and dulled consumer appetite. For 2021, we expect a significant increase on the back of a recovering global economy, and assuming no second waves of coronavirus,” said the company.
Wood Mackenzie is forecasting liquids demand to average 99 million b/d in 2021, a 6 million b/d jump from 2020.
“That would take global demand almost back on a par with 2019; but still 3 million b/d below our pre-crisis forecast for 2021.We reckon the oil demand will gain about another 5 million b/d from 2021 to 2025 and stand just 1 million b/d below our pre-crisis forecasts. Our thesis is that the global economy is still heavily dependent on oil; there’s no ready alternative,” said the company.
At the same time, Wood Mackenzie believes that there are irrepressible secular drivers of demand. “Rising global population growth, GDP growth and the expansion of the middle class will reassert themselves in the next few years and drive demand to new highs.”
Fitch Solutions believes that the source of fuel demand most impacted by Covid-19 is used mostly in transportation and this is also the segment responsible for the greatest share of growth for future oil demand across the period till 2024.
The resulting global economic recession is expected to reduce industrial activity and energy consumption used in manufacturing, freight transportation and mining as there will be less demand for goods which will hit diesel, bunker and jet fuel, said the company.
“The massive collapse in air travel has significantly eroded jet fuel consumption during the pandemic. Gasoline consumption is also expected to fall as less workers commute owing to high unemployment. Factor in the changes to working from home, video conferencing and a limited desire for air travel as well, it makes for a very bearish narrative for fuel demand. However, as the economy recovers, fuel demand will return as employment recovers, people resum commutes and the need for the transportation of goods recovers. Given the lack of affordable and large-scale alternatives to internal combustion vehicles such as EVs, we see the next five years remaining stronger for fuel demand once the economy recovers,” said Fitch Solutions.
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