An uneven oil demand recovery across regions and products was forecast by S&P Global Platts Analytics this Wednesday, with an estimated increase of 6,3 million barrels a day for 2021.
Despite this recovery, oil demand will remain 2,4 million barrels a day lower than pre-pandemic periods. As a second wave of covid-19 cases surge in Europe and the Americas, the recovery will have elevated risk, said S&P in a report.
Because of this, S&P Platts analytics trimmed its oil demand forecast for this year. Now, it expects to fall by 8,7 million barrels a day, in contrast to the original 8,5 million Bd.
Platts analytics forecast is aligned with the International Energy Agency forecast. Earlier this month, IEA said oil demand for 2020 would plunge by 8,8 million Bd, due to the resurgence of coronavirus cases.
Nevertheless, IEA’s expectations for next year are also similar to Platts’. The Paris-based agency expect the demand to grow by 5,8 million Bd in 2021, as the vaccine most likely won’t resuscitate the oil market immediately, but well into 2021.
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Other risk factors for oil demand
According to Platts Analytics, “demand recovery in 2021 is based on a global GDP growth of 5%, with oil prices expected to range between $41-51 per barrel.”
“But vaccine deployment will be a critical variable, affecting oil demand positively if developed and applied quicker than expected,” the report underlines.
In China, demand is expected to grow only 500,000 barrels a day, which is equivalent to 3%, while in the U.S. the growth is estimated in 1,7 million Bd, and in Europe 1,1 million Bd.
The greatest peak for petroleum products will be gasoline, with a 10% recovery of 2,4 million Bd. Gasoil and diesel will also peak 5% or 1,3 million Bd, according to the report.
On the other hand, the biggest plunge will be seen with jet fuel, as the pandemic has heavily reduced travels by plane. Jet fuel and kerosene will grow up to 1,5 million Bd in 2021, but it still will be 20% below pre-pandemic levels.
Other factors that Platts analytics considers as risks for oil recovery are the constant U.S.-China tensions and the finalization of the Brexit.