There are always two ways of looking at things. The glass is either half full or half empty. And today, this stands true for the oil industry.
Global oil demand growth is expected to taper off, Julianne Geiger said quoting the latest report from IHS Markit, the world’s largest energy consultancy.
Global oil demand is currently sitting at 89 per cent of pre-pandemic levels, it said. It is then expected to rise and level off at between 92pc and 95pc of the demand pre-pandemic.
Oil demand growth, therefore, will wane and plateau through Q1 2021 as fewer people are commuting to work, and as air travel slumps considerably amid remaining travel restrictions and people’s subdued appetite for air travel—particularly international air travel, Geiger underlined.
Oil demand hinges largely on jet fuel and US gasoline demand. And so far in 2020, global jet fuel demand and gasoline, though, have rebounded from April, yet the global jet fuel demand is still off 50pc year to date. The US gasoline demand is also down, though by a lesser amount, but still significant, at around 20pc, despite rebounding from its April lows, at the height of the US lockdowns.
Global oil demand is expected to remain depressed into 2021 as airplane travel and work commutes have yet to recover from the coronavirus pandemic, Paul Takahshi underlined too, quoting the IHS report.
However, Matthew V. Veazey of Rigzone, looked at the same IHS Markit report, rather differently, saying the global oil demand has grown at a record pace – by 13 million barrels per day (mbpd) – in the past four months since the nadir of the Covid-induced collapse in April.
Presently at 89pc of pre-Covid levels, global oil demand has risen from 78pc in April, IHS noted in a written statement emailed to Rigzone, with the demand expected to level off at 92 to 95 mbpd through the first quarter of 2021. As per the Rigzone report, the anticipated plateau in demand will stem primarily from subdued air travel and commutes.
Geoffrey Morgan, writing for Financial Post of Canada, also looked at the IHS Markit report differently, underlining, despite projections that the coronavirus pandemic would hasten peak oil demand, global consumption for the commodity has rebounded by an astounding 13 mbpd in the past four months.
“We were surprised (oil demand) has gone up even with the surge in the US cases in June and July,” Jim Burkhard, vice-president, and head of crude oil research at IHS Markit was quoted as saying by Morgan.
As per the IHS Markit report, oil demand will likely stay between 92 and 95 mbpd, until the virus, is contained, or effective vaccines are developed. Pre-pandemic oil demand had climbed to around 100 mbpd and was expected to cross the three-digit mark in the coming years.