Oil demand ‘unlikely to rebound until Q3 2023’
Global oil demand will not return back to pre-virus levels until the third quarter (Q3) of 2021, and a forecast of 2.5 million barrels per day (m b/d) quantum is seen as a permanent level of demand destruction, a report said.
Despite an assumed pick-up in momentum over the summer, we forecast that global liquids demand will only expand to an average 97m b/d by year-end, as aviation demand in particular is slow to convalesce losses, said Mitsubishi UFJ Financial Group (MUFG), a Japanese bank holding and financial services company, in its latest Oil Market Weekly report.
“As a result – absent the risk of iterative virus waves – we model 2020 annualised global oil demand ~8mb/d lower at 92m b/d. We believe global oil demand will breach the pre-virus run-rate of 100m b/d only in Q3 2021, averaging 98.6m b/d in 2021,” the report said.
“This is 2.5m b/d lower than our previous assessment, and we adopt this quantum as the permanent level of demand destruction, given we view the fall-out from Covid-19 will be long-lasting. As the world emerges from lockdowns, a combination of weaker economic growth and lingering impacts of Covid-19 mobility restrictions will still be a drag on the recovery in oil demand, especially jet fuel.
“Thus, we continue to forecast the damage persisting well into 2021, and our expectations were similarly echoed by the IEA in its latest monthly assessment this week, projecting that global oil demand will return to pre-Covid-19 levels only by 2022. In the medium-term, we expect structural shifts to consumer, corporate and industrial behaviour, to more than offset promising demographic trends and EM expansion, to slow oil demand growth,” it added. – TradeArabia News Service