Oil demand forecasts are improving, according to OPEC and the International Energy Agency in mid-July. Will the optimistic views prove to be correct? We have learned how the market can change or crash, both historically and in the very recent past.
Watching the forecast, which reflects some sort of consensus, is encouraging for producers.
OPEC’s monthly report on July 15 predicted global oil demand to reach nearly B / D 100 million next year, a level similar to before the 2019 pandemic. Oil in 2021 remains unchanged at 5.95 million B / D, or about 6.6%.
Driven by demand growth in the United States, China and India, an increase of 3.4% is expected in 2022 to 99.86 million B / D and would average over 100 million of B / D in the second semester.
“Strong expectations exist for global economic growth in 2022,” OPEC said. “These include better containment of COVID-19, especially in emerging and developing countries, which are expected to boost demand for oil to reach pre-pandemic levels in 2022.” If the real recovery Following these forecasts, OPEC can reverse its record supply cuts made in 2020.
The IEA says that the expected growth in global demand for electricity is boosting demand for fossil fuels, including petroleum, coal and natural gas. After falling by around 1% in 2020, growth in electricity demand could approach 5% in 2021 and 4% in 2022. The Asia-Pacific region will account for the majority of the increases. China, the world’s largest consumer of electricity, tops the rankings, accounting for more than 50% of growth in 2022. India, the third largest, will account for 9% of global electricity growth.
Renewable energy is expected to be able to meet about half of the projected growth in global demand in 2021 and 2022. The IEA wrote: “Renewable power generation continues to grow strongly, but cannot keep up with the growth. growing demand. After increasing by 7% in 2020, electricity production from renewable energies is expected to increase by 8% in 2021 and more than 6% in 2022. “
Electricity from fossil fuels is expected to cover 45% of the additional demand in 2021 and 40% in 2022. After decreasing by 4.6% in 2020, electricity production from coal will increase by almost 5% in 2021, exceeding pre-pandemic levels. In 2022, it will increase by another 3% and could reach a record level. Electricity produced with natural gas lags behind coal because it is less commonly used in the Asia-Pacific region and competes with renewables in the United States and Europe. It is expected to increase globally by 1% in 2021 and by almost 2% in 2022 after falling by 2% in 2020.
The US Energy Information Administration last month released a global financial review of 91 oil and gas companies, most of which are headquartered in the United States, in the first quarter of 2021. It said the companies are implementing their announced plans last year to reduce capital expenditure payable. reduce debt. Capital spending in 1Q2021 was reported at $ 48 billion, 28% lower than in 1Q2020 and the second lowest amount for a quarter since 2016. Cash flow from operations in Q1 of this year totaled $ 79 billion, 19% more than in 1Q2020; around 76% of companies have positive free cash flow. Overall, corporations reduced their debt by $ 16 billion in 1Q2021, and the long-term debt-to-equity ratio fell to 54%.