Global oil demand won’t return to 2019 levels until at least 2022 and the gap may be getting wider than it seemed a month ago. All three of the world’s main oil forecasting agencies — the International Energy Agency, the U.S. Energy Information Administration and the Organization of Petroleum Exporting Countries — published new quarterly forecasts this week and none project oil demand back at 2019 levels by the end of next year.
Transport fuels are proving particularly vulnerable, with jet fuel and gasoline hardest hit during the depth of the pandemic and remaining so as restrictions have been gradually eased. With the Northern Hemisphere summer holiday season drawing toward its close at the beginning of September, time is fast running out for the normal seasonal boost to both driving and flying. Commercial flights are languishing 40% below their peak January level, according to data from Flightradar24. Long-haul flights have been hit particularly hard; U.S. ticket purchases for international flights were down by 86% year on year in June, the most recent month for which figures are available from the Airlines Reporting Corporation.
The global stock changes derived from the IEA and OPEC demand and supply forecasts, assuming the full implementation of the OPEC+ output deal for the rest of this year and all of 2021, show global oil inventories falling back to end-2019 levels in the final quarter of next year. The more optimistic EIA forecast shows the excess worked by the middle of the year. The producer group has a long road ahead of it. OPEC’s report shows the group’s compliance with its share of the output target at 97% in July, according to the secondary sources it uses to monitor the deal. The IEA puts it at 87% and at 89% for all 20 members of the OPEC+ group. They’ll need to do better than that if they are to work of the inventory overhang by the end of 2021.