The oil market will tighten in the second half of this year, with jet fuel demand driving a rebound in consumption, especially in China, Amrita Sen, Director of Research at Energy Aspects, said at the FT Commodities Global Summit on Tuesday.
Demand in China is very consumer-driven after the reopening, Sen said at the summit, adding that gasoline and jet fuel demand are set to rebound.
“That’s why I am very confident of the second-half numbers, we are going to see some really strong gasoline and jet [demand],” the energy analyst note.
“Jet is going to be the big story this year,” Sen added.
As long as China continues to reopen, expectations of a second half with strong global oil demand remain intact, Energy Aspects’ director of research said.
The forecast came as the oil and financial markets saw one of the most tumultuous weeks so far this year with the near-collapse of Credit Suisse and the takeover by UBS as Switzerland attempted to stop the contagion to the global banking system.
Despite the massive market selloffs in recent days, Energy Aspects, as well as other forecasters, expect the oil market fundamentals to turn bullish in the second half of this year.
The oil market is set to swing from a supply overhang in the first half of 2023 to a deficit in the latter part of the year as the economic rebound in China will push global oil demand to a record high, the International Energy Agency (IEA) said last week in its monthly report.
World oil demand growth is set for a sharp acceleration over the course of this year, from an estimated increase of 710,000 barrels per day (bpd) in the first quarter to a jump of 2.6 million bpd in the fourth quarter of 2023, the IEA said in its Oil Market Report. Between Q1 2023 and Q4 2023, global oil demand is set to surge by 3.2 million bpd, taking average growth for the year to 2 million bpd.
“Rebounding air traffic and the release of pent-up Chinese demand dominate the recovery,” the IEA said.