Platts cuts India’s 2021 oil demand by 28%; sees crude topping $70

has reduce India’s demand for oil & fuel amid the second wave of Covid circumstances which have triggered lockdowns throughout key states for the reason that previous few weeks. For 2021, it now pegs the oil demand progress at 350,000 barrels per day (b/d), down from a forecast of 485,000 b/d made in February – translating right into a fall of almost 28 per cent. India’s metropolis fuel demand, Platts stated, may drop by 25 – 30 per cent within the coming months.

 

“Since the dramatic escalation of new cases in mid-to-late February, we have revised down India’s oil demand forecast by 135,000 b/d for 2021 – with downward adjustment of 175,000 b/d for April, 760,000 b/d for May, 830,000 b/d for June and 360,000 b/d for July – down from a forecast of 485,000 b/d made in February,” stated Kang WU, head of worldwide demand and Asia analytics at

However, as soon as the lockdowns are lifted, Platts expects the pent-up demand to get launched, which in flip will act as a catalyst for financial progress and set off a requirement uptick for oil & fuel within the nation.

 

“April demand has been down month-on-month, and we expect another decline in May, but recovery in the second half of the year remains in sight. Oil demand in H2-2021 is expected to be 650,000 b/d higher than the first half of 2021 (H1-2021), driven by a more broad-based pickup in economic activity amid widening vaccination rollouts,” WU stated.

 

Besides India, the demand forecast for 2021 has been revised down for Western Europe and Latin America because of extra restrictions stemming from second and third waves of Covid. Brent oil costs, WU stated, will peak in mid-2021 at over $70 per barrel.

At the worldwide degree, Platts expects world oil demand progress at 5.5 million b/d in 2021. “We expect sequential on month global oil demand to grow strongly by more than 8 million b/d over May to August, due to seasonal uplifts along with normalisation from recent lows in demand,” WU stated.

However for 2022, Platts has pegged the worldwide oil demand at 4.4 million b/d, 20 per cent decrease in comparison with 2021. Upward revisions are primarily for the US, Europe, and China. Broadly talking, world demand may have recovered to pre-pandemic ranges in 2022, although the notable exception for impairment will proceed to be jet fuels.

 

Inflation scare

Elevated commodity costs, together with that of oil, analysts say, are more likely to fan inflation going forward, which might be detrimental for India. Investors concern {that a} surge in inflation, particularly within the US would pressure central banks to lift rates of interest earlier-than-expected and set off a flight of capital from rising (EMs), together with India.

 

“Investors should prepare for the biggest inflation scare since the early 1980s as pent-up demand is triggered as the American economy normalises. It remains the case that the timing of the severity of the inflation scare will be determined by what happens with inflation expectations. And they have risen over the past week as a result of the ‘shockingly’ weak jobs data and the surge in April CPI inflation,” wrote Christopher Wood, world head of fairness technique at Jefferies in his newest weekly observe to buyers.

 

2nd wave weighs on world outlook

 

Demand within the second quarter remains to be about 4 mn bpd beneath the identical interval in 2019, in accordance with each IEA and Opec (the EIA sees the deficit about 3.4 mn barrels). And a more in-depth take a look at the most recent outlooks exhibits causes to stay cautious. Two of the three (the IEA and EIA) have reduce their forecasts of oil demand progress this 12 months. Oil climbed above $64 a barrel on Friday, aided by a restoration in equities and a softer greenback. But costs have been nonetheless headed for a weekly fall with the unfold of Covid-19 in Asia, particularly India, menacing demand. “The power market does not know what to make of Wall Street’s fixation over inflation and the sluggish flattening of the curve in India,” stated Edward Moya, senior market analyst at OANDA. India is the third-biggest oil client.Agencies