“Almost all forecasters expect jet fuel to struggle in 2021 to recover lost demand, and gasoline demand will be under pressure to reach 2019 levels,” the agency said in a report.
In a new report on the oil market, reputable energy institutions downgraded their estimates for demand recovery.
The International Energy Agency, the Organization of the Petroleum Exporting Countries (OPEC) and the US Energy Information Administration believe that oil demand will remain below the end of 2019 until the end of 2019, before the corona epidemic and beyond. Remained. Meanwhile, OPEC has the most pessimistic estimates of the future of black gold compared to the other two entities. In its August report, the agency cut its estimate of demand levels for all future seasons until the end of 2021, except for the first quarter of next year, and believes that demand will fall by one million barrels this year more than the agency estimates.
*** OPEC is optimistic about the first half of 2021
However, OPEC is optimistic about the first half of 2021, as it estimates that last month’s shortfall of 3.6 million barrels from 2019 demand for the period to 2 million barrels per day. The International Energy Agency (IEA) is also more pessimistic than last month, estimating demand in the second half of this year to be 500,000 barrels lower than previously oil forecast. It also cut its previous estimate for oil demand in the next two warm seasons by 400,000 barrels. However, the US Energy Information Administration (EIA) is more optimistic than the other two entities, even raising its last month estimate for all seasons by the end of next year.
According to the EIA, oil demand will recover largely next year, and by the end of 2021 it will be only 350,000 barrels per day lower than the 2019 level. On oil prices, the agency also expects West Texas Intermediate and Brent to average $ 38.5 and $ 41.42 a barrel, respectively, this year. In addition, the two oil indices will be priced at $ 45.53 and $ 49.53 per barrel next year, according to the EIA.
*** OPEC in a circuit of despair
An OPEC report released last Wednesday said global oil demand this year would be lower than previously expected, making it more difficult for it to support the black gold market. The agency, which represents oil-exporting countries, said oil demand would fall 9.6 million barrels a day this year, more than it had estimated last month. The July OPEC report estimated the figure at 8.95 million barrels per day.
Oil prices fell sharply as the corona restricted travel and economic activity, and despite the gradual growth in demand, the shadow of the second wave of outbreak over the oil market continues to push black gold prices. OPEC believes that these conditions of fear and hope in the market will remain stable.
However, OPEC has adhered to its 2021 demand estimate and believes that oil demand will grow by 7 million barrels per day next year, although this may also be overshadowed by many uncertainties that could have a negative impact on Consume, be placed. For example, demand for air travel, less fuel-efficient vehicles, and competition with other energy sources could threaten the oil market.
“Almost all forecasters expect jet fuel to struggle in 2021 to recover lost demand, and gasoline demand will be under pressure to reach 2019 levels,” the agency said in a report.
*** Historical decline in oil production
To compensate for the decline in demand as a result of quarantine around the world, OPEC and its allies decided to reduce production historically from 7.7 million barrels per day at the beginning of this month (August). According to the report, OPEC production in July increased by 980,000 barrels per day to 23.17 million; This has happened mainly due to the end of the reduction of surplus and voluntary production of Saudi Arabia, the UAE and Kuwait. As a result, the group was able to adhere 97% to the OPEC Plus agreement in July, which is lower than in June. That month, OPEC was more than 100 percent committed to its commitments.
The report also said that demand for oil produced by OPEC members will be lower than previously oil forecasts as both the outlook for global demand in 2020 will weaken and supply from outside countries will increase. According to OPEC, its demand this year will average 23.4 million barrels per day, which is 400,000 barrels less than previously estimated.
*** Growth of pessimism in the agency report
The International Energy Agency has cut demand in its estimate, despite seeing a brighter future for oil than OPEC. According to the Paris-based agency, which represents consumer countries, global oil demand in 2020 will average 91.9 million barrels per day, an annual decline of 8.1 million barrels. The figure is also 140,000 barrels less than the agency’s estimate last month, which is in fact the institution’s first reduction in oil forecasts in a few months. According to the Agency, this is due to a sharp drop in mobility due to coronary constraints as well as weakness in the aviation sector. The IEA also said that next year’s demand will reach 97.1 million barrels per day, which is 240,000 barrels less than last month.
According to the International Energy Agency, oil supplies increased by 2.5 million barrels per day in July as Saudi Arabia and other regional allies halted voluntary production cuts and US production is recovering. The organization said since OPEC Plus from It has entered the second phase of its agreement earlier this month, and other producers will reopen some of the closed wells, and supply will remain stable in August. However, the agency said global supply of black gold would decrease by 7.1 million barrels by 2020 and increase by 1.6 million next year.
*** The most negative impact on jet fuel and gasoline
Fuels used in transportation have been shown to be vulnerable, as jet fuel and gasoline have received the most negative impact from global quarantine and demand recovery is slow. On the other hand, the summer holidays in the Northern Hemisphere, which naturally lead to an increase in fuel consumption every year, are coming to an end. In addition, commercial flights are 40 percent lower than their peak in January, and long-haul flights are even more affected by the viral crisis. Tickets for international flights in the United States fell 86 percent in June, according to the Airlines Reporting Corporation.
Changes in global inventories from OPEC and IAEA reports indicate that inventories will return to 2019 levels in the last quarter of next year. Of course, the reports of these two institutions are based on the assumption that OPEC Plus is fully committed to the production reduction agreement for the whole of this year and next.
*** American optimistic institution
In its latest report, the US Energy Information Administration raised its oil forecasts for global demand for 2020 by 250,000 barrels per day from the previous month, in contrast to OPEC and the IAEA. It also raised its estimate for next year’s demand by 280,000 barrels. The Energy Information Administration estimates that global demand in 2020 and 2021 will be 93.14 and 100.16 million barrels per day, respectively.
The EIA says US gasoline demand will also grow faster than previously oil forecasts. Gasoline consumption in the United States will reach 9.16 million barrels per day this month, the highest monthly average since November. Also, the demand for gasoline will exceed last year’s level for the first time in March 2021. However, the agency said the process of recovering diesel demand will be slower.
*** Increase estimates of production next year
In addition, the EIA has reduced the country’s oil production by 370,000 barrels this year to 11.26 million barrels per day. The government, however, has raised its production estimate for next year by 130,000 barrels. According to the institute, the United States will produce an average of 11.14 million barrels per day of oil in 2021, which will gradually increase to 11.5 million barrels by the end of the year. US production in both years will be completely lower than the production level of 12.25 million in 2019.
The United States has become a net importer of oil again since May this year, as weak global demand has reduced its exports of refined products. The Energy Information Administration believes the United States will remain a net importer of oil until the end of next year. However, in a short period of time, the country’s exports will exceed its imports.
It also raised its oil forecast for prices by $ 1 a barrel this year and 17 cents next year.
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