S & P global Platts said Asia's gasoline market will see further growth in demand in 2021, with consumption expected to rise, especially in the second half of the year.
However, industry insiders warned that the launch of mass vaccination program is slower than expected, a series of reactions caused by the emergence of new virus strains and the possibility of low product profit margin may lead to slow recovery of gasoline market.
Industry experts point out that even if the number of local transmission increases, many countries have not yet reached the initial mass vaccination target. In addition, the recent emergence of highly infectious variants of coronavirus has injected new uncertainty into the prospect of gasoline demand.
"Vaccination programs in many countries are behind schedule, so while demand for gasoline is bound to grow this year, the question is to what extent," said one trader
Standard & Poor's said that although the baseline assumption is that the impact of vaccines on global economic activity will begin to appear in the second half of 2021, there are still some variables that will affect the pace of recovery.
"With the recovery of the region's economy, diesel demand in Asia is expected to decline by 2.7% to 9.8 million B / D in 2020 and rebound by 3.2% in 2021."
"However, in the past few weeks, some Asian countries have seen more cases of covid-19 every day, so it is necessary to pay close attention to them, because the speed of the outbreak will directly affect the economic prospects of the region, thus directly affecting the demand for oil, especially so far, the progress of vaccine launch is slow."
Market participants have also been considering a regional supply balance with severe turbulence in 2020. Industry experts said that the pandemic accelerated the wave of refinery closures and changed the global refining pattern. Due to low refining profit margins, several regional refineries were forced to close or review operations.
For example, BP plans to close its largest refinery in Kwinana, Australia, and shell of the Philippines plans to close its tabangao refinery in the Philippines. This will offset a wave of new supply flows into the market, the source said.
On the other hand, gasoline production from two refineries in the Persian Gulf, Jazan in Saudi Arabia and Al Zour in Kuwait, will bring fresh crude oil into the spot market.
Nevertheless, in 2021, refineries may choose to continue to operate at lower prices due to low profits. "Global gasoline demand will recover, but the profit margin problem still exists, and the profit margin is still very low This raises questions about the long-term profitability of more and more refineries, and that refineries will continue to pay lower prices for longer periods of time? "
In a report released on January 6, Platts analytics said gasoline supply and demand had improved steadily since early November 2020, but remained weak overall. "Asian refining margins have been negative for months This and regional overcapacity continue to affect product balance. "
"Middle distillate stocks remain high due to weak aviation fuel demand, while refineries in the region continue to maintain high gasoline production By 2021, there will be too little demand and still too much capacity. "