Demand Forecast Sees Return of Some Normalcy

Copyright © 2021 Energy Intelligence Group

Despite fresh outbreaks of the Covid-19 Delta variant, the rollout of vaccines is restoring some normalcy to oil markets, including a return to demand seasonality. With some exceptions, oil consumption patterns are acting more like before the pandemic started in early 2020, which should improve the reliability of demand forecasts going forward. This year's demand recovery has shrouded the impact of seasonal fuel demand, perhaps except for US gasoline during the just concluded summer driving season. Covid-19 wiped an estimated 8.9 million barrels per day from oil consumption to 92.1 million b/d last year. Some 5.2 million b/d should return this year, Energy Intelligence reckons, but new outbreaks keep forcing tweaks to that estimate. Even in normal times, changes to forecasts can be large. The pandemic made forecasting harder as it knocked the base out of demand models. Supply had to adjust, mostly through Opec-plus cuts. In a regular year, 100 million b/d of demand for oil products is met roughly by 80 million b/d crude that is processed through refineries; 15 million b/d by natural gas liquids; 3 million b/d by biofuels; and 2 million b/d by refinery gains.

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