(The Canadian Press)

By Canadian Press

reason for optimism

Global oil demand rebound from pandemic’s lows prompts price spike forecasts

Jul 6, 2020 | 2:18 PM

CALGARY – Oil analysts say a rebound in the world’s hunger for oil has already started after demand destruction caused by the COVID-19 pandemic fell far short of what many experts had expected.

Amrita Sen, co-founder and director of research for international consultancy Energy Aspects, claims the bounce in demand will outstrip the ability of producers to restore supply, resulting in average Brent oil prices rising from about US $43 per barrel this year to US $66 next year and US $83 in 2023.

In a presentation at the virtual TD Securities energy conference, Sen says pandemic lockdowns of countries and industries resulted in forecasts for a 30-to-40 per cent decline from pre-pandemic global oil demand of about 100 million barrels per day.

Her organization expected the decline to reach 28 million barrels per day (BPD), but the maximum drop was 18 million BDP in April. The industry’s “spare capacity” has now has fallen to about 12 million BPD.

Sen believes the shallower drop in demand and quick recovery illustrates how dependent the world is on crude and suggests that its oil dependence will not be diminished in the near term.

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In an energy price forecast released Monday, accounting firm Deloitte also makes note of the oil demand recovery and predicts Brent crude prices will rise from an average of US $39 per barrel this year to US $46.50 in 2021 and US $64 in 2023.

(The Canadian Press)