BAKU, Azerbaijan, Nov.3
By Leman Zeynalova – Trend:
After embedding the larger and longer mobility drops and cutting our jet estimates in Europe and the US, over the last week, the US JP Morgan Bank has cut global November demand by 890kbd and December by 1.08mbd, Trend reports citing the Bank.
“This pulls our 4Q20 average down to 93.6 mbd, or -7.1 percent yoy. We still project around 1.0 mbd of growth in global demand over the next two months; however, it’s important to point out that this is essentially entirely due to underlying seasonal factors in Asia. Even before these cuts, we were already more bearish than agency consensus and while we will get their refreshed numbers in the coming weeks, our current 4Q20 estimate now sits about 2.5 mbd lower than the IEA’s October estimate and more than 1.2 mbd lower than OPEC’s latest forecast.
“The recent downgrades to 4Q21 have also prompted us to also take a closer look at our forecast for 2021. In particular our previous forecast for 1Q21 now appears far too punchy in light of our forecasted reversals in US and European mobility as well as generally stalling mobility in the rest of the world. Feeding through these lower starting places on road fuel as well as reconciling our jet fuel estimates to the reality that it will likely be hard to push above 60 percent in the coming two quarters results in a substantial 1.6mbd cut to our 1Q21 demand forecast. This outpaces our recent downgrades to November and December demand as we now feel required to reconcile that growth in other regions outside Europe and the US will likely not reach our previous estimates. This switch from growth to closer to a continued stall in the rest of the world amplifies the cuts rolling through to next quarter in the US and Europe. In total, we now see 1Q21 global demand averaging 93.8mbd, or 5.2 percent lower than 1Q19 for comparison. That being said, we still embed a strong 2H21 recovery on the back of vaccine distributions, seeing demand breaching back above 100 mbd on a quarterly average basis in 4Q21,” said JP Morgan.
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