BAKU, Azerbaijan, May 10
By Leman Zeynalova – Trend:
Global oil demand is on track to surge around 4.4 mbd over summer, Trend reports citing the US-based JP Morgan Bank.
“Globally we now forecast oil demand averaging 94.7 mbd in May, largely on par with our estimates for April, before inflecting higher to 97.2 mbd in June, 98.2 mbd in July and 99.2 mbd in August. This forecast implies global demand moving from an average between 4-5 percent below 2019 over April and May to only around 2 percent below 2019 levels in August. In terms of risks, the downgrades in India highlight the key potential downside risk to our outlook going forward.
With relatively low levels of vaccinations in Asia and many larger Asian consuming countries not expected to reach 60 percent vaccination until late 2021 or early 2022, there is serious potential for future successive waves in these countries leading to demand losses and offsetting growth in other regions. While this likely wouldn’t be enough to derail the global recovery all together, it has the potential to weigh on the growth we expect, working to disappoint the market's expectations for the strength of demand over the coming summer. That being said, we think this downside risk from Asia is offset by potentially stronger-than-forecasted recoveries in the US and Europe,” JP Morgan said in a report.
Despite the strong forecasted recoveries throughout 2Q and 3Q—the Bank expects 3Q21 demand in the US and Europe to be 3.2 mbd higher than 1Q21 vs a seasonal increase of only 1 mbd in 2019—we still forecast 3Q21 US demand about 440 kbd below 2019 with European demand just over 1 mbd lower than 2019 given larger structural declines. “Nonetheless, the majority of this difference is from subdued jet demand vs the 2019 baseline. A stronger-than-expected recovery in jet or, more likely, in our view, a bigger rebound in road fuels demand over the summer is a strong possibility that would keep global balances tighter than we expect even with lingering demand risks in Asia.”
---
Follow the author on Twitter: @Lyaman_Zeyn