The world’s biggest oil trader Vitol Group is expecting an increase in crude demand globally this winter. Energy crunch, including gas, is driving the demand for alternate fuels. As per Bloomberg news, Vitol expects the demand for crude oils to increase by half a barrel per day in the coming winter.
According to Bloomberg sources, the CEO of Vitol, Russel Hardy, expects the oil price to go past $80 a barrel on higher demand. The higher gas price, which has resulted in the shift to oil, can force OPEC and other producers to push more supply in the market.
According to Hardy, “power switching among fuels can push demand to the upside. The extra demand for half million barrels per day is most likely this winter“.
Goldman Sachs who has been predicting higher cruder prices this winter has echoed Hardy’s view. If this winter happens to be colder than normal and with the tightening of gas markets due to price constraints, traders expect the usual European gas stockpiles to be lower. This is based on a projection for October when gas stockpiles are expected to be at 78% of normal levels.
Hardy is of the view that people are worried about the gas stocks, which could be in tight supply. “People store gas for the winter. As per Hardy,” There are no two ways about it.” Demand for gas is much higher in winter than in summer.
Global Demand for Cleaner Fuels
According to Hardy, demand for cleaner fuels for power systems and pipelines by countries like China, India, Bangladesh, and Pakistan has coincided with tightness in gas stock supplies. This impact will keep the gas prices up and force buyers to purchase alternative fuels like LPG or Naphtha. This is evident from the fact that LPG is trading at $1200 per ton, whereas LPG is only $750 per ton.
Post pandemic, oil demand dipped globally to about 4 million barrels per day, much lower than 2019. This slip was mainly to lower jet fuel consumption as lockdowns brought everything to a standstill. CEO Hardy feels the gap will narrow down steadily, and oil demand will reach 2019 levels by the middle of next year and predicts that the peak demand will come around 2030.
OPEC, along with its coalition partners, is micromanaging the crude oil market so that planned output keeps the price in check. Hardy is not worried. He says, “It is finely balanced for the coming six months. We are not worried for the demand in the long run“.