Petrotahlil --The global crude oil demand forecast has been revised to 96.9m bbl/day in 2021, up from 91.2m bbl/day in 2020, the International Energy Agency said on Tuesday.
The smaller rise is due to weak demand for jet fuel and kerosene as a result of less travel demand in the first half of 2021.
The outlook for 2021 is cautiously optimistic, with the IEA expecting demand for both gasoline and diesel to return to 97-99% of their 2019 levels.
Non-OPEC producers outside of OPEC+ are expected to increase output in 2021 by 400,000 bbl/day after a fall of 1.3m bbl/day in 2020.
Concerns over vaccine efficacity, availability and deployment along with a rise in cases after the winter holidays could bring downward pressure on oil demand in 2021.
SUPPLY, DEMAND IN 2020
The IEA expects the year on year decline in global crude oil demand to stand at 8.8m bbl/day in 2020, a modest 50,000 bbl/day downward revision from the agency’s previous report.
Global supply rose 1.5m bbl/day month on month in November to 92.7m bbl/day as the US recovered from hurricane shut ins and Libya built up production.
Global demand has recovered from its trough in Q2 when demand was 16.4% below 2019 levels. However, the second wave of coronavirus cases continues to impact demand as a result of lockdown measures to contain the coronavirus, with demand in Q4 remaining 6.2m bbl/day down year on year.
In Europe, Q4 demand is lower than in Q3, as new lockdowns take their toll on crude oil demand.
OPEC+ countries have amended their quota by a modest increase of 0.5m bbl/day each month starting January, showing flexibility in their arrangements. This amendment by OPEC+ members is based on reports that demand will be lower than expected when the supply agreement was concluded in April.
Oil prices have moved rapidly and smoothly, based on stronger Asian demand and effective OPEC+ supply management, according to the IEA.
In November ICE Brent futures rose $2.46/bbl in November to $43.98/bbl and closed at $49.97/bbl on 11 December.
The Paris-based agency projects estimated product stock draws reached their 2020 peak in October and are expected to slow until the next leg of demand recovery in Q2 of 2021.
Global refinery throughputs fell about 1m bbl/day in October mainly due to maintenance and hurricane shutdowns.
In November, these hurricane-related outages drove the first monthly increase in US throughputs since July.
Refiners can expect a tough winter with both their seasonal slowdown of product demand and a combination of tighter crude oil markets presenting a challenging environment in the short-term.
Even as US demand continues to recover, estimated demand for refined products has fallen since July, in line with seasonal trends and social restrictions as a result of the second wave of coronavirus.
The IEA has revised their refining forecast for 2021 for Europe up slightly.