The Borneo Post (Sabah)

Global oil demand won’t return to prepandemi­c levels till 2022

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KUALA LUMPUR: Global oil demand will not return to prepandemi­c levels until 2022 amid the ongoing Covid-19 pandemic, said AmInvestme­nt Bank Bhd (AmInvestme­nt).

According to independen­t energy research and business intelligen­ce firm, Rystad Energy's Covid-19 April Update and Market Outlook, herd immunity would not be achieved except in some countries in Latin America by this year, the investment bank said in a research note today.

“So far, only East Asia, such as China, has largely suppressed the virus, while multiple waves of the virus continued to plague the US, European Union and Latin America,” AmInvestme­nt said.

Domestic activity in the Organisati­on for Economic Cooperatio­n and Developmen­t (OECD) countries will likely reach near 100 per cent in the second half of 2021, even though internatio­nal travel will not fully normalise until vaccinatio­n has been fully deployed, likely by 2023, it added.

“As such, new technologi­es and behaviour will structural­ly change energy consumptio­n as exemplifie­d by the decline of business travel,” AmInvestme­nt Bank said.

Following the sharp drop in global oil demand by 20 million barrels per day (bpd) in April last year, the gap narrowed to 5.7 million bpd in March 2021.

“Based on a monthly incrementa­l demand of 430,000, Rystad expects a December 2021 shortfall of 1.8 million bpd versus pre-pandemic 2019 level, leading to a 6.5 per cent increase year-onyear to 95.4 million bpd for 2021,” AmInvestme­nt Bank said.

It said the fastest recovery is expected from East Asia while the rest of the world will struggle with slower growth rates.

“In China, oil demand for road fuel and flight activity has almost rebounded to 2019 levels as domestic travel has increased by 30 per cent, while internatio­nal flights are still down by 60 per cent.

“In the US, road traffic and flight activities have shown improvemen­t while European aviation is still 60 per cent below 2019 levels,” AmInvestme­nt Bank said.

AmInvestme­nt Bank said global E&P investment was expected to be flat this year, followed by a 10 per cent increase in 2022, driven by US shale/tight oil, Middle Eastern onshore projects and offshore deepwater developmen­ts in Brazil.

With improved crude oil prices, the investment bank said E&P companies were expected to register an increase of 56 per cent year-on-year (yoy) in operating cash flows to US$580 billion (US$1= RM4.1280/1330) this year.

“At US$60 per barrel, free cash flows for public E&P players could double to US$330 billion in 2021 from US$140 billion last year. However, Rystad expects companies to reward shareholde­rs instead of ramping up capital expenditur­e investment­s. Hence, investment ratio is projected to reach only 42 per cent this year versus 65 per cent in 2020, which experience­d a sharp drop in prices and demand,” it said. — Bernama

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 ?? — Bernama photo ?? Domestic activity in OECD countries will likely reach near 100 per cent in the second half of 2021, even though internatio­nal travel will not fully normalise until vaccinatio­n has been fully deployed, likely by 2023.
— Bernama photo Domestic activity in OECD countries will likely reach near 100 per cent in the second half of 2021, even though internatio­nal travel will not fully normalise until vaccinatio­n has been fully deployed, likely by 2023.

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