MOSCOW (MRC) -- Global oil demand is expected to reach pre-pandemic levels by early next year as the economy recovers, although spare refining capacity could weigh on the outlook, reported Reuters with reference to producers and traders' statements.
The outlook is in line with a bullish forecast from the Organization of the Petroleum Exporting Countries (OPEC), but ahead of estimates from the International Energy Agency (IEA).
Global demand is seen rising to 100 million barrels per day (bpd) by end-2021 or in the first quarter of 2022, Hess Corp President Greg Hill said.
The world consumed 99.7 million bpd of oil in 2019, according to the IEA, before the COVID-19 pandemic hammered economic activities and fuel demand.
While a persistent rise in COVID-19 cases across markets has hurt recovery in demand for some refined products such as jet fuel, consumption trends of petrol and diesel indicate growth, industry leaders noted at the APPEC 2021 conference.
Recovering demand is expected to boost profits for refiners and create room for returning or new production, but experts warn that spare refining capacity would be a drag.
"There's still a lot of unutilised capacity and a lot of capacity has been taken off stream," said Eugene Leong, president of BP Singapore and CEO of BP's trading & shipping arm of Asia Pacific and the Middle East. "The spare (refining) capacity is probably going to act as a little bit of a cap on margins," he said. "This year alone we've seen some mega refining (and) petrochemical complexes start up, so I think that's going to be challenging for refining."
In China, new mega refiner Shenghong Petrochemical is set to start trial operations soon, while Zhejiang Petrochemical completed two new crude units this year.
Malaysia's Petronas also hopes to restart operations at its 300,000 barrels-per-day refinery-petrochemical complex with Saudi Aramco by year end, said Arif Mahmood, Petronas' executive vice president and CEO of downstream.
The OPEC sees global oil demand averaging 100.8 million bpd in 2022, exceeding pre-pandemic levels, while the IEA expects it to average 96.1 million bpd in 2021 and 99.4 million bpd in 2022, versus 90.9 million bpd in 2020.
As MRC wrote before, Indian refiner Nayara Energy hopes to operate its 400,000 bpd refinery at close to 100% capacity in 2021 as fuel demand picks up, CEO Alois Virag said.
India's fuel demand is likely to rise by 9%-11% as its economy is "steered towards higher growth" after the easing of the second wave of COVID-19 infections, he said.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,396,960 tonnes in January-July 2021, up by 7% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 841,990 tonnes in the first seven months of 2021, up by 29% year on year. Supply of propylene homopolymers (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of statistical copolymers of propylene (PP random copolymers) subsided.