BAKU, Azerbaijan, Dec.9
By Leman Zeynalova – Trend:
In terms of balances, the oil market is lagging behind that of natural gas by at least several months, Trend reports with reference to the Oxford Institute of Energy Studies (OIES).
OIES believes that one of the reasons is that COVID-19 had a much bigger impact on oil demand in 2020 compared to other fuels.
“Oil demand is estimated to have fallen by 8.8 percent in 2020. This contrasts with natural gas which declined by only 2.3 per cent in 2020, a fall more in line with the decline of 3.1 per cent seen in global GDP. During the first half of 2020 crude and products stocks built steadily. OECD commercial stocks accumulated at a record pace, increasing by around 242 mbbls between February and April alone, as oil demand took a hit and OPEC+ increased its output after the breakup of the existing supply agreement in March 2020. The buildup in OECD stocks peaked in July 2020, reaching 334 mbbls, while at the same time global floating storage increased by another 224 mbbls,” reads the report released by OIES.
OIES analysts note that due to the negative demand shock and OPEC+ cuts, the Group was left with significant spare capacity of nearly 10 mb/d.
“OPEC+ has been restoring those barrels into the market in a gradual way, helping to ease oil price pressures. The recovery in oil demand has been uneven across geographies and across fuels with jet fuel yet to recover to pre-virus levels amid a slump in global aviation. Global jet fuel demand is estimated to average 5.7 mb/d in Q4 2021, up by 3.4 mb/d from its low of 2.3 mb/d in Q2 2020, but still 1.8 mb/d below pre-pandemic levels, when
global jet demand stood at 7.6 mb/d (compared to Q4 2019),” the report says.
The Institute analysts note that Saudi Arabia plays a key role in the oil market as a holder and manager of spare capacity.
“It is the only country where maintaining spare capacity is a cornerstone of its oil policy. Russia does not play a similar role in the gas market,” the report reads.
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