Oil Demand Back at 2019 Levels and Set to Rise

The head of Vitol Group, the world’s biggest independent oil trader, said global demand has recovered to 2019 pre-pandemic levels and is poised to go even higher early next year.

Chief Executive Officer Russell Hardy said demand for oil will exceed 2019 levels during the first quarter of 2022. He spoke online at the Reuters Commodities Trading Conference on Tuesday.

The strong demand call by the top oil trader adds to bullish sentiments issued by production major BP Plc, which said that demand for crude is back to about 100 million barrels a day, levels not seen since before the pandemic. 

The rebound in demand for fossil fuel hydrocarbons comes as global political, corporate and climate change activist leaders meet in Glasgow for the COP26 talks in an effort to agree on reductions for greenhouse gas emissions and the transition to cleaner fuels.

Market supply and demand is “going to be reasonably tight” for the next 12 months and a price spike to $100 a barrel is “certainly a possibility,” Hardy said.

Hardy cautioned that demand has returned even as jet fuel and U.S. gasoline demand are not yet fully recovered to pre-pandemic levels.

The forecast underscores how demand for diesel and petrochemicals is driving the crude oil recovery despite continued weakness in air travel that has decimated demand for jet fuel.

Hardy didn’t provide a specific oil demand number saying only that it had returned to levels last seen in 2019.

“We are at or about 2019 levels now,” Hardy said. 

The Vitol CEO said the oil market will remain tight as OPEC producers currently have between 2 million barrels and 3 million barrels a day of spare production capacity.

U.S. oil production growth will be less than 1 million barrels of oil a day in 2022, Hardy said, underscoring the market tightness.

--With assistance from Alex Longley and Julian Lee.