S&P GLOBAL PLATTS EXPECTS DEMAND FOR OIL MARKET TO IMPROVE

KUALA LUMPUR, June 22 -- S&P Global Platts expects demand for the oil market to improve in the coming months, mainly on the back of the global COVID-19 vaccination rollouts and cold weather in the Northern Hemisphere.

Head of macro, demand, risk and Asia analytics Kang Wu said the variants of COVID-19, however, posed a challenge for further improvements in the oil industry. 

"With the mass vaccinations, we hope for things to get better by summer, then we have to prepare for winter. 

“The fundamentals of the oil market are well, with demand getting higher," he said during a webinar titled "Asia-Pacific Energy Transition: Perspectives From Commodities Markets, Ratings And Sustainable Finance" today.

At press time, Brent crude rose 0.33 per cent to US$75.15 (US$1=RM4.14) per barrel, for the first time in more than two years amid signs of a rapidly tightening market.

S&P Global Ratings credit analyst Danny Huang said the agency had recently raised the prices assumption for Brent crude at US$65 per barrel for the rest of 2021, US$60 per barrel in 2022, and US$55 per barrel in 2023. 

"Oil prices have recovered to pre-pandemic levels due to growth and demand recovery, as well as production cuts by OPEC+. 

"We remain cautious on the price in the long term due to the energy transition or transition to cleaner energy sources, and that is why we raised the industry risk for oil and gas earlier this year and our low oil price for the long term," he added.

Meanwhile, Kang said the pandemic has significantly altered the energy transition outlook, although the structure remained the same. 

"The pandemic has significantly lowered global energy consumption, last year in particular, and it translated into lower carbon emissions.

“Last year, we calculated that carbon emissions were down by almost six per cent globally," he added. 

Kang believed that by 2040, global carbon emissions could be reduced by 34.6 gigatonnes, five per cent lower than pre-pandemic levels. 

In a note earlier this month, S&P Global Ratings said national oil companies (NOCs) in the Asian region would likely find it difficult to make a transition to an entirely new business model to be part of the energy transition. 

It said the NOCs may have stranded assets in the process and they probably will not be as successful in renewable energy, carbon capturing or electric vehicle recharging, among others, as they are producing and selling fossil fuels. 

Moreover, the energy transition could happen in five to 10 years, instead of 10 to 20 years, and a fast transformation may be messy and disruptive, it added.

-- BERNAMA