NEW DELHI, July 11: India registered an increase in oil demand in the month of May by 1.1 million barrel per day on a month-on-month basis against the Chinese growth of 0.7 mb/d, according to the latest IEA Oil Market Report of International Energy Agency.
The report, which is one of the world’s most authoritative and timely sources of data, forecasts and analysis on the global oil market, has however projected the global demand to decline sharply by 7.9 mb/d in the current calendar year due to the intensified pandemic. The demand recovery to the extent of 5.3 mb/d can happen in 2021.
Published on Friday, the report has also suggested that the global supply could fall by 7.1 mb/d in 2020 before seeing a modest recovery of 1.7 mb/d next year. This indicates that the oil price, which has seen the worst ever decline in the month of April-2020 when it slided into the negative territory, may rise considerably in the next calendar year.
While the price rationalisation will help Indian companies like Oil & Natural Gas Corporation (ONGC), Cairn India, Oil India to rebound strongly in the next fiscal, the oil marketing companies like IOC, HPCL and BPCL may continue to face it tough, says an analyst of India Gas Foundation.
Global oil supply fell by 2.4 mb/d in June, to a nine-year low of 86.9 mb/d due to the demand destruction as well as steep production cut by OPEC countries, Russia, Canada and the United States. The world output has been cut by nearly 14 mb/d since April, the Report stated.
For refiners, any benefit from improving demand is likely to be offset by expectations of much tighter feedstock markets ahead. Refining margins will also be challenged by a major product stocks overhang from the very weak 2Q20. Global refinery runs are forecast to fall by 6.4 mb/d in 2020 to 75.1 mb/d and increase by 4.7 mb/d in 2021.
However, the report has maintained that the outlook may go haywire as Covid-19 is still “casting a shadow” forcing fresh lockdowns in major cities.