Global oil demand is expected to accelerate the rebound in the second half of 2021

Dependence on OPEC supply

It said, “Confidence will be an important driving factor for the market next year
.
But the fundamentals of the oil market are still relatively bearish because of large inventories
.
”

Oil prices will strengthen before the end of 2021

Platts Analytics predicts that the spot Brent price will fall to the range of US$40-45 per barrel in the short term, and will rise again to US$50 by the end of 2021
.

However, given that OPEC still has a large amount of idle production capacity and the progress of the new crown pneumonia vaccine, we still need to remain cautious
.

Platts Analytics predicts that due to the re-implementation of anti-epidemic lockdown measures in March and April, oil price trends will "struggle slightly" in the first half of the year
.

Midgley said, "We believe that the current oil price of $50 is $10 higher than a reasonable level
.
Although oil prices are currently rising, they are actually driven by market confidence rather than fundamental factors
.
"

  More refineries will be shut down

Midgley said, "The refinery will continue to be squeezed
.
Demand growth is not enough to consume all the idle capacity on the market
.
In addition, the production of liquefied natural gas and biofuels is also rising, which basically replaces the demand for refined oil
.
" In fact, there are currently about 8 million barrels/day, or 9 million barrels/day of excess capacity
.
Only when refined oil production rises, these excess capacity will decrease
.
Assuming an increase in demand by 6 million barrels/day next year, the idle capacity will be There is a little more left
.
"

Even assuming a rebound in demand for refined oil next year, the increase in energy refining (mainly in the Middle East and Asia) will be even greater
.
More supply of biofuels and liquefied natural gas will continue to compete for market share, and will result in the forced reduction of crude oil processing capacity at refineries in 2021
.

Midgley said, "This will squeeze the profit margins of existing refineries, especially if the rebound in transportation demand is not smooth
.
"

In the United States, some production capacity has been optimized and adjusted to biofuel companies, and fossil fuels have been replaced by biodiesel, sustainable aviation fuel and renewable diesel, which exacerbated the dilemma of refineries
.

Midgley said, "I think the next wave of adjustments will occur in Europe
.
Demand in Europe has been showing a downward trend
.
And obviously, the decline in aviation fuel demand will help balance Europe's own distillate shortage
.
"

European refineries are also facing competition from large Middle Eastern refineries that are in the start-up phase
.
The construction of the Dangote refinery with a daily capacity of 600,000 barrels in Nigeria is also nearing completion
.

"I think Europe is going through another round of adjustments
.
With the opening of the Dangote refinery, there will be another round of adjustments," Midgley said
.