Global demand for crude oil could see a bigger surge than traders and analysts have penciled in for 2023 as China fully reopens its economy and the world puts the COVID-19 pandemic behind it, one of the world’s top oil traders argued Thursday.

“If demand came back to trend in 2023, that would mean a demand growth of 4.6 mbd (million barrels a day) vs 2022, way above most analysts expectations of 1-2 mbd demand growth,” said Pierre Andurand, founder of Andurand Capital, in a Twitter thread.

In the thread, Andurand looked at the pandemic-related hit to oil-demand growth versus the long-term trend. Past hits to demand growth have seen a quick return to trend, he noted.

But a full return to the trend might not be in the cards, Andurand cautioned. The main reason is the increasing adoption of electric vehicles.

He noted that from 2019 to 2023, 35 million new EVs will have been sold, representing a loss of 600,000 barrels a day of oil demand. Russia’s invasion of Ukraine has also delivered a shock, Andurand said, which could deliver a 300,000 barrel a day hit to demand.

Partially offsetting those hits to demand is the potential for more “revenge” travel, some switching to oil from natural gas by power suppliers in response to an earlier surge in natgas prices, and global population growth.

“So, overall, the potential to see a surge of oil demand of 3-4 mbd sometime in 2023 is there, assuming the world reopens fully,” he calculated.

Bloomberg last month reported that Andurand Capital’s largest fund had pared its year-to-date gain to 50%. Andurand scored huge returns in 2020 and 2021 on prescient energy-market bets, according to news reports.
Source: MarketWatch