News Apr 27

Chinese drivers boost global petroleum outlook

Fuel consumption worldwide is due to increase about 6% this year from 2020 to 97.7 million barrels per day, US Energy Information Administration data forecast

Chinese drivers boost global petroleum outlook
A dock worker, wearing a face mask to prevent the spread of Covid-19, looks at an oil tanker unloading crude oil at a port in Qingdao, Shandong province. File photo by Reuters.

(ATF) Chinese drivers have helped turn the global oil outlook positive, as the country is first to recover from the coronavirus pandemic, according to new data.

The resumption of driving - a crucial factor in the petroleum market's recovery - has seen rising fuel use in China, the United States and the United Kingdom among larger markets.

However, a surge of Covid-19 in India, another major market, is holding back oil consumption.

Fuel consumption worldwide is due to increase about 6% this year from 2020 to 97.7 million barrels per day, US Energy Information Administration (EIA) data forecast.

The Organisation of the Petroleum Exporting Countries and its allies, known as OPEC+, is monitoring demand in the United States, China, and India, the world's three largest fuel markets.

The OPEC+ technical committee said last week it was concerned about surging Covid-19 cases in India and elsewhere.

DRIVING PATTERNS

Many people globally are still working from home, but weekend driving patterns show motorists are leaving the house more frequently, with weekend congestion in numerous cities surpassing 2019 levels for the first time since the pandemic started.

It's a factor that has changed the outlook for the global energy industry to positive from stable, according to rating agency Moody's Investors Service.

"A sustained uptick in commodity prices on the back of a recovering global economy is set to bolster a turnaround in industry fundamentals over the coming 12 to 18 months." the agency said.

Moody's maintains its medium-term commodity price ranges of $45-$65/barrel for oil.

"Pent-up consumer demand and increasing trade and manufacturing activity as the Covid-19 pandemic is brought under control are driving a rebound in global economic activity," Elena Nadtotchi, a Moody's senior vice-president, said.

"This, in turn, is quickening the pace of a recovery in demand for oil and gas through late 2021 and into early 2022."

RISING CONSUMPTION

Although emerging economies such as China have a lower work-from-home potential, according to a McKinsey & Co report last year, the country's petrol consumption is expected to surpass the previous two years.

Over a holiday week at the beginning of April, congestion was up 20% from 2020 and up 53% from 2019, according to data tracked by Chinese internet giant Baidu. Motorists prolonged holidays and drove additional long-distances.

Chinese refineries boosted the volume of crude they took in almost 20% in March from a year earlier because of robust demand.

Consumption is due to reach 125 million tonnes in 2021, up 8% from 2020 and up 0.1% from 2019, according to China National Petroleum Corporation data.

The United States is due to consume about 5% less oil than in 2019, while China is expected to consume about 3% more, the EIA said.

With reporting by Reuters

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