Oil demand strengthens on increasing global travels

A new report has shown that global oil demand is strengthening due to robust gasoline consumption and increasing international travel especially as more countries re-open their borders.

According to the International Energy Agency (IEA) in its Global Oil Market Report for December, new Covid waves in Europe, weaker industrial activity and higher oil prices have tend to temper gains, leaving forecast for oil demand growth largely unchanged at 5.5 mb/d for 2021 and 3.4 mb/d in 2022, since it released its November report.

The global energy agency noted that global oil supply is expected to rise 1.5 mb/d over November and December, with the US providing 400 kb/d of the gain. Total oil supply had already leapt 1.4 mb/d m-o-m in October after the US rebounded from Hurricane Ida.

“Saudi and Russia combined would account for 330 kb/d in line with OPEC+ targets.

“Global refining throughput is set to increase by almost 3 mb/d from October through December as seasonal maintenance wraps up. Refinery margins rose in October, driven by exceptionally tight product markets, despite the sharp gains in crude oil prices. Further ahead, refinery throughputs are expected to stabilise and generally hold flat in the first half of 2022 before the seasonal increase in the third quarter of 2022,” the report stated.

IEA, in the report, further noted that Organisation for Economic Co-operation and Development (OECD) total stock plunged 51 mb in September, with crude oil and middle distillate holdings accounting for most of the declines. In terms of regions, Europe led the draw-down. “At 2 762 mb, total OECD industry stocks stood 250 mb below the five-year average and at their lowest level since the start of 2015. Preliminary data for October point to a marginal stock build,” IEA said.

This, the report said, have led to oil market drivers shifting , just as benchmark crude prices are easing as a result. Brent crude futures were trading around $81/bbl, down from a high of more than $86/bbl in October. On physical markets, North Sea Dated prices rose in October by $9.15/bbl m-o-m to $83.54/bbl and WTI at Cushing by $9.79/bbl to $81.96/bbl.