World oil demand has grown by 13 million bpd over last 4 months – to plateau just below pre-COVID levels

Must Read

Iranian super tanker ‘horse’ set to violate U.S. sanctions again by shipping Venezuela crude

(Bloomberg) --After defying U.S. sanctions by shipping a cargo of oil condensate to Venezuela just last week,...

“Female-owned’ maritime institute prepping hundreds of Guyanese for deepwater operations

MatPal Marine Institute, the only maritime institution in Guyana, is equipping hundreds of Guyanese with internationally recognized...

BHP projects, amendment to Petroleum Tax can be game changers for T&T – Energy Chamber

While oil production in Trinidad and Tobago has been on the decline since the 1980’s, two current...
OilNOW
OilNow is an online-based Information and Resource Centre which serves to complement the work of all stakeholders in the oil and gas sector in Guyana.

World oil demand has grown at a record pace—by 13 million barrels per day in the last four months—since the bottom of the COVID-induced collapse in April. But that pace of growth is expected to taper off with global crude demand plateauing just below pre-pandemic levels, according to a new analysis by IHS Markit.

Global crude demand surged from May to July with the easing of some COVID-19 restrictions and now rests at 89% of prior year levels–compared to being at 78% in April.

IHS Markit expects demand growth to wane and plateau at 92-95 mbd (or roughly 92-95% of prior year levels) through the first quarter of 2021.

The main cause for the pause is expected to be travel—especially air travel and commuting to work—remaining subdued until COVID-19 is contained and are vaccines widely available.

“The meteoric rise of world oil demand from the lowest lows of the COVID crash is going to come up just short of a full comeback, at least for now. For demand to fully return, travel—especially air travel and commuting to work—needs to get back normal. And that won’t happen until there is containment of the virus and effective vaccines,” said Jim Burkhard, IHS Markit Vice President and head of oil markets.   

IHS Markit said the number of air flights globally is about 30% below February levels (compared to 78% below in April). But actual jet fuel consumption is still 50% off prior year levels since long-distance flights have not recovered to the extent of shorter ones.

Retail gasoline sales in the United States are also an important signpost, IHS Markit stated. U.S. retail gasoline sales are bigger than total oil demand in any other market except mainland China.

OPIS by IHS Markit tracks U.S. retail gasoline sales each week. Sales improved rapidly from May to early July after falling to 50% prior year levels in April. But sales have hovered at 17-18% below earlier year levels since.

However, the expected plateau of global crude demand does not mean a return to the record levels of oversupply that crashed oil prices—briefly to less than $0 per barrel—in April. Renewed restraint by OPEC+ members and lower U.S. output still point to supply deficits in the second half of 2020.

Hitting the pause button on demand growth doesn’t mean a return to the supply overhang that cratered prices back in April. OPEC+ members have rediscovered production restraint since then and U.S. output is expected to be lower as well. That means that markets can continue to rebalance, even if a full return to pre-COVID demand levels is put off for the time being,” Burkhard said.

- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest News

Iranian super tanker ‘horse’ set to violate U.S. sanctions again by shipping Venezuela crude

(Bloomberg) --After defying U.S. sanctions by shipping a cargo of oil condensate to Venezuela just last week,...

Bidders line up for ExxonMobil’s UK North Sea oil and gas fields

(Bloomberg) -Exxon Mobil’s UK North Sea assets have attracted suitors from state-owned companies to private equity-backed firms as the U.S. oil giant...

“Female-owned’ maritime institute prepping hundreds of Guyanese for deepwater operations

MatPal Marine Institute, the only maritime institution in Guyana, is equipping hundreds of Guyanese with internationally recognized and accredited certifications for employment...

BHP projects, amendment to Petroleum Tax can be game changers for T&T – Energy Chamber

While oil production in Trinidad and Tobago has been on the decline since the 1980’s, two current events could potentially change the...

Guyanese recruitment firm hosts session on labour law

Strategic Recruitment Solutions (SRSGY) hosted a two-hour learning session titled Employee Engagement – Guyana Labour Law, on Tuesday, September 22. This session...

More Articles Like This