Is the Oil Demand Outlook Too Modest?
(The views and opinions expressed in this article are those of the attributed sources and do not necessarily reflect the position of Rigzone or the author.)
In this installment of what to watch this week in the oil and gas markets, two of Rigzone’s regular prognosticators suggest paying attention to the U.S. rental car market as well as airport security screenings for clues about oil demand. In fact, one of the market-watchers suggests that activity – and pricing – in the car rental sector provides a more robust glimpse of demand. Additionally, a third regular market-watcher sees something missing as companies climb aboard the net-zero bandwagon. Read on for details.
Mark Le Dain, vice president of strategy with the oil and gas data firm Validere: Still feels like the market is underestimating incoming demand. Try renting a car right now in many U.S. centers and you will see shortage pricing. The rationale for the lack of cars is that many car rental companies sold inventory to stay afloat during the pandemic. There is truth to that, but at some point I think people will either come to terms with the fact there is considerable pent-up demand and/or there is now a structural preference for driving based on advice on exposure from authorities.
Phil Kangas, US Partner-in-Charge, Energy Advisor, Natural Resources and Mining, Grant Thornton LLP: As the spring break holiday rolls out this week and next, we’ll continue to watch trending U.S. travel statistics as a harbinger of increased demand for oil. For example, the U.S. Transportation Security Administration heralded the first day of spring with reaching a key milestone: 1.5 million travelers screened at major U.S. airports. Such throughput numbers have not been seen since nearly exactly a year ago, on March 20, 2020, when the country had begun to shut down travel. While still substantially lower than 2019, the upward trend in these travel numbers is a sign of recovered demand for oil.
Tom McNulty, Houston-based Principal and Energy Practice leader with Valuescope, Inc.: More and more large American energy companies will jump on the bandwagon and make some kind of net-zero carbon promises. SoCal Gas just did so, pledging to be net-zero “emissions” by 2045. Are these pledges being made because they will be hard to really measure? How will SoCal Gas keep the lights on without natural gas? This will continue to be the core debate in the Energy Transition: what becomes of natural gas?
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