BAKU, Azerbaijan, Dec.15
By Leman Zeynalova – Trend:
Oil demand will rebound by more than 6 million barrels per day (b/d) in 2021, but consumption is still expected to be more than 2 million b/d below that of 2019's 101.9 million b/d, Trend reports with reference to S&P Global Platts.
Explaining the reason, the company said that the global middle class - the real engine of oil demand - faces continued pressures from wealth inequality and the ongoing COVID-19 cloud. “Widespread vaccine deployment is unlikely to occur until H2 2021, which won't prevent periodic lockdowns for several months. Complicating matters is the reality that initial distribution of any vaccine will skew toward the elderly and frontline workers – important groups to be sure – but not ones that will drive the recovery in oil demand.”
S&P estimates that due to the sharp reduction in air travel, kerosene/jet fuel demand represented more than a third of the overall demand decline in 2020, falling by 3.1 million b/d.
Jet fuel will remain the laggard going forward, keeping distillate supply more in surplus through the first half and refineries operating more in gasoline-production mode, the company believes.
Further the S&P report says that OPEC+ will be the dominant factor for 2021 oil supply.
“Libyan supply will continue to defy expectations, rising to 1.2 million barrels per day (b/d), subject to the tenuous ceasefire. With a new US Administration, supply upside could come from Iran and Venezuela, though progress promises to be slow.
It will be increasingly difficult for OPEC+ to walk the tightrope between volume and price, with the organization looking to both increase revenues and prevent a sizeable rebound in US market share. US oil production is set to decline another one-million b/d in 2021 on a year-over-year basis due to steep declines in the shale base, with slow pick up in rigs/frack crews.
Overall, fundamentals will resume the ascendancy over sentiment, which should see Dated Brent oil prices soften in the short-term to the low $40s-per-barrel area, but should prompt a price move toward $50 per barrel by the end of 2021, with WTI to recover to just under $50/b. However, caution is warranted, given the uncertainties regarding robust OPEC spare capacity and Covid-19 vaccine deployment,” said the company.
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