Oil Demand Recovering at Record Pace
World oil demand has grown at a record pace – by 13 million barrels per day (bpd) – in the past four months since the nadir of the COVID-induced collapse in April, IHS Markit reported Tuesday.
Presently at 89 percent of pre-COVID levels, global oil demand has risen from 78 percent in April, the consultancy noted in a written statement emailed to Rigzone. The firm attributes the increase to relaxation of some COVID-19 restrictions. It predicts demand should continue to go up until leveling off at 92 to 95 million bpd through the first quarter of 2021. It pointed out the projection equates to roughly 92 to 95 percent of prior year levels.
The anticipated plateau in demand will stem primarily from subdued air travel and commutes, IHS stated.
“The meteoric rise of world oil demand from the lowest lows of the COVID crash is going to come up just short of a full comeback, at least for now,” remarked Jim Burkhard, IHS Markit’s vice president and head of oil markets. “For demand to fully return, travel – especially air travel and commuting to work – needs to get back to normal. And that won’t happen until there is containment of the virus and effective vaccines.”
IHS Markit also stated the number of air flights globally is approximately 30 percent lower than February levels – a marked improvement from the 78-percent shortfall in April. However, it observed that actual jet fuel consumption remains 50 percent lower than prior-year levels because the number of long-haul flights has not recovered to the extent of short-haul flights.
Burkhard also pointed out the expected plateau in oil demand growth does not mean a return of the supply overhang that caused prices to plunge in April. He explained that production restraint by the OPEC+ alliance as well as lower projected U.S. output should allow markets to continue rebalancing.
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