Global oil consumption is expected to return to pre-pandemic levels in the the third quarter of 2022, with Asia continuing as the center for oil-product demand growth, according to BP Plc.
Oil demand in 2022 is expected to see an average gain of 3.8 million barrels a day year-on-year, easing from growth of 5.4 million barrels a day in 2021, the President of BP Singapore Eugene Leong said in an email interview. Stockpiles of crude and most products returned to normal levels by June following supply restraint from OPEC+ and an economic recovery, he added.
“We have seen oil demand recover from the lows witnessed in the second quarter of 2020, but it has not rebounded to the same levels as before,” Leong, who is also BP’s chief executive officer of trading and shipping for the Asia-Pacific and Middle East, said on the sidelines of Platts APPEC 2021. “Oil demand recovery is expected to continue into the rest of this year and 2022.”
Oil prices and consumption have rapidly rebounded in 2021 as COVID-19 vaccination rates accelerated and restrictions on movement have been eased. Goldman Sachs Group Inc. sees continuing strength in the market and has boosted its year-end price forecast, while Vitol Group is predicting a slightly earlier return to pre-virus demand levels -- by mid-2022.
Chinese oil demand this year is expected to advance at a similar rate to 2020, which was about 1.8 per cent, according to Leong. The nation’s consumption of crude will continue to grow over the next few years, with more refining capacity expected to come online through early 2022, he said.
Still, global oil output growth will probably outpace consumption next year as OPEC+ and U.S. producers add more supply, leading to a surplus of 700,000 barrels a day, said Leong. That compares with an estimated draw of 1.6 million barrels a day in the second half of 2021, he added, citing market consensus.
“The world’s energy needs are evolving dramatically, and the uncertainty around how and when the pandemic will end will certainly impact the market dynamics,” Leong said.