Oil demand markers in many of the world’s biggest consumers remain on an upward trajectory as key economies continue to recover, lending further support to oil prices which have broken through the $80/b level this week to a fresh multi-year high.
Global mobility, a barometer for gasoline and diesel demand, averaged 8.1% below pre-COVID levels in most of the world’s top oil users excluding China in the week to Sept. 30, according to Google data.
Based on mobile phone activity, the figures reflect adjusted data provided by Google covering 13 countries, which combined account for half of the world’s total oil demand, or some 50 million b/d.
Asia has seen the biggest regional recovery in mobility over the past couple of weeks, the data showed, with the average at just 6.4% below pre-pandemic levels. India and Japan have showed a marked improvement and South Korea has shifted above pre-pandemic levels.
The Americas region also pointed to increased mobility, while European economies on average showed activity had plateaued, the data showed.
Demand strength
S&P Global Platts Analytics believes fourth-quarter oil demand growth will be led by Asia and predicts global demand will grow nearly 5.4 million b/d in 2021.
A similar view is held by the head of Vitol, who was speaking on a webinar organized by Dubai-based Gulf Intelligence this week.
“This tail end of Q4 is typically the period of the year when Asia starts to pull on inventories pretty hard, demand is high and it becomes increasingly a function of how cold the weather is,” Mike Muller said.
The Dated Brent oil benchmark has been hitting fresh three-year highs in recent days partly on demand strength and after OPEC and its allies decided to stick to its script and approve a 400,000 b/d increase at its October meeting.
An energy crunch across the globe and most notably in demand-hub China is raising the prospect of increased switching from gas to oil too.
However, Platts Analytics noted that “localized outbreaks of coronavirus are likely to continue into 2022, but not of the magnitude seen by the various highs in 2021”.
Much will rest on the shoulders of OPEC+ in the fourth quarter to manage the market, especially if mobility indicators continue upwards and gas to oil substitution rises.
“It is going to be an awfully delicate balance to make judgments on whether the higher prices will begin to impact demand or whether they (OPEC+) need to heed the signals coming from substitution, switching into oil fuels,” Muller told the webinar. “I think for this particular winter, control over prices is very much in hands of OPEC+.”
By the end of 2022, Platts Analytics expects gasoline and diesel demand to be some 800,000 b/d above 2019 levels and jet fuel still some 10% below 2019 levels.
Source: Platts