BAKU, Azerbaijan, Jan.28
By Leman Zeynalova - Trend:
Following 2020’s unprecedented oil demand shock amid the Covid-19 pandemic, Wood Mackenzie expects 2021 total liquids demand to average 96.7 million barrels per day (b/d), 6.3 million b/d higher than the 2020 annual level, Trend reports.
“Our short-term forecast assumes vaccine distribution accelerating through 2021 and is underpinned by 5 percent expected growth in global GDP, according to our macroeconomic outlook, following the global economy’s 5.4 percent contraction last year.
“The pace and strength of the global liquids demand recovery will depend on the pace of Covid-19 vaccine distribution and global economic recovery,” Wood Mackenzie vice president Ann-Louise Hittle said.
Even with demand projected to increase strongly, 2021 refinery utilisation will remain low, hence the threat of refinery rationalisation remains. Over one million b/d of refining capacity will be completed in the Middle East and Asia this year; it remains to be seen if these new-build sites might prompt further rationalisation in Europe and across Asia.
Vice president Alan Gelder said that in 2020, there was a surge in product stocks, particularly for middle distillates given the collapse in jet demand.
“A rapid recovery in gasoline demand could lead to weak distillate prices as gasoline demand will set refining runs. The relative recovery in demand between products is important to watch. However, any material increase in crude runs will weaken the pricing of high sulphur fuel oil as its current high price reflects limited supply.”
Petrochemical integration and low freight rates changed the global pricing dynamics for diesel at the start of this year, depressing European prices, refining runs and margins. European prices are now below those of Singapore as Asian refiners are running at high rates. Oil demand in Asia has recovered faster and their integrated refinery/petrochemical sites are achieving attractive margins.
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