By The Nation
Attapon Rerkpiboon, chief executive officer and president of PTT Plc (PTT), told the Annual Petroleum Outlook Forum on Thursday that demand for fuel and energy had passed their lowest point and were increasing in line with the economic recovery. However, he added
that PTT had a crucial part to play in Thailand’s energy security and economic recovery after Covid-19 and said strategic plans for unforeseen changes are always necessary.
“PTT and the fuel company group realise that they must play an important role in building energy security for the country,” said Attapon.
“We must adjust to build strength and sustainability for organisations and countries to drive the country through this economic crisis by disseminating information on energy to society … A well-rounded understanding will strengthen Thai society and bring the greatest benefits to all sectors, both now and in the future.”
Bandhit Thamprajamchit, chairman of the Petroleum Refining Industry Club, called Covid-19 “the great reset” that had triggered history’s biggest ever drop in oil demand. This had resulted the world's major oil exporters coming together to find a way to balance the oil market, he said.
Metha Veeraolarnkul, international trade officer at PTT, noted that Covid-19 had seen global oil consumption drop about 9 per cent on average, spiking to as much as 20 per cent, compared to last year. During the 2008 economic crisis, oil consumption only fell by 4 per cent, he said.
Driving this trend was the drop in consumption of big economies like the United States and China, with the US using 2.3 million barrels per day (-12 per cent) and China using less to 600,000 barrels per day (-4 per cent). Chinese consumption was now increasing as effective Covid-19 control enabled resumption of economic activities, he said.
Meanwhile, oil consumption in the transportation sector is also down, with a 47 per cent drop in jet fuel use as 55 per cent of global flights were halted – with a return to normal not expected until 2024.
However, the world economy would continue to recover next year, driven by travel by car and the auto industry, where sales have returned to normal levels. New US president Joe Biden would also launch a short-term stimulus policy to help the US and world economy recover.
Two scenarios for next year’s oil demand were presented at the forum.
Best case: If Covid-19 can be controlled, the global economy will grows about 5.2 per cent and oil demand will increase by 5.3 million barrels per day.
Worst case: If the spread of Covid-19 is not contained and the mortality rate remains high, the global economy may expand by 3.4 per cent and oil consumption increase by about 1.3 million barrels per day.
PPT’s PRISM Expert predicts Dubai crude oil prices in 2021 at $45-$55 per barrel, an increase from 2020 due to Covid-19 vaccine hopes, international economic stimulus packages and trends in renewable energy. However, the analysts estimate Dubai crude oil will be $35-$45 if Covid-19 cannot be controlled.
Amonthep Chawla, chief economist of CIMB Thai Bank, said the Thai economy will expand around 3-4 per cent next year, but there are still four factors to be monitored: Political factors, including a Cabinet reshuffle that may affect continuity of economic policy; baht appreciation that will affect exports; the second phase of the coronavirus outbreak; and the risk of a trade war continuing even after the US gets a new president.