EIA Explains Developments in Global Oil Consumption

In its January 2021 Short-Term Energy Outlook Supplement: Developments in Global Oil Consumption, EIA explained the effects on oil consumption, beyond an economic recession’s implications alone, increased the challenges in estimating petroleum consumption. Looking back at 2020, even in May and June, the extent of consumption declines in April were unknown, and to some extent, are still unknown.

EIA initially forecast larger declines in oil consumption than actually occurred. In the May STEO, EIA estimated April 2020 world oil consumption declined to 76.3 MMbbld, which EIA subsequently revised to 80.6 MMbbld as OECD countries and some non-OECD countries released oil consumption data.

Looking to the future, in the forecast for 2021 and 2022, EIA forecasts that some mandatory and voluntary travel restrictions will still be in place in the first half of 2021 amid a resurgence in COVID-19 cases as of late-2020, although the level of restrictions and their duration remain highly uncertain. EIA forecasts that a return to more normal consumer behavior and a continued recovery in GDP will contribute to rising oil consumption in 2021 as the year progresses, with growth of 5.6 MMbbld, or 6%, in 2021.

EIA forecasts that the United States will account for 1.4 MMbbld of that growth and that the rest of the world will account for 4.1 MMbbld. Oil consumption will increase in 2021 because of both economic growth and a return to more normal travel patterns by the middle of the year, which will also have a small effect on oil consumption growth in 2022. Despite the forecast increases in global oil consumption in 2021, EIA still expects it to average 97.8 MMbbld, which is 3% below the 2019 level.

For 2022, EIA forecasts global consumption of petroleum and other liquids will grow by 3.3 MMbbld, or 3.4%. EIA forecasts that the U.S. will account for 1.0 MMbbld of that growth and the rest of the world will account for 2.3 MMbbld. The 2022 world ex-U.S. forecast is mostly the result of EIA’s model output as the effects of travel restrictions and other behavioral changes decline. The model results are highly dependent on the level of economic activity. EIA’s consumption-weighted world GDP growth for 2022 is 4.3%, which EIA derives from forecasts from Oxford Economics. Despite the many uncertainties ahead, EIA expects that global oil consumption will generally return to its same-quarter 2019 levels by the second quarter of 2022. For 2022 as a whole, EIA forecasts consumption will average 101.1 MMbbld, only 100,000 bbld less than in 2019. Although EIA does not publish a forecast of world oil demand by fuel, EIA expects that jet fuel consumption will continue to be lower than 2019 levels through 2022 because EIA assumes international air travel will not fully recover by then. Other fuels, such as hydrocarbon gas liquids (HGLs), propane and ethane for example, will be much higher than 2019 levels. HGLs are used intensively in petrochemical processes, such as plastics production, and EIA expects global demand for plastics will continue to spur demand for HGLs.

SOURCE: The Weekly Propane Newsletter, January 14, 2021. Weekly Propane Newsletter subscribers receive all the latest posted and spot prices from major terminals and refineries around the U.S. delivered to inboxes every week. Receive a center spread of posted prices with hundreds of postings updated each week, along with market analysis, insightful commentary, and much more not found elsewhere.