Goldman Sachs Raises Oil Demand Forecast; Sees Peak at Least a Decade Away — OPIS

Analysts at Goldman Sachs raised their global oil demand forecast and said peak petroleum demand is at least a decade away in a report released Sunday.

The analysis isn't as bullish as the path suggested by OPEC, but it includes considerably more demand growth than a previous 2024 study published by the International Energy Agency.

Goldman sees significant demand acceleration until 2034 with a "long plateau" filling out the rest of that decade. The bank upped its estimate for 2030 demand by 2.5 million b/d to 108.5 million b/d. Goldman analysts have a base case that calls for a peak level of 110 million b/d by 2034, but they include a provision for a slower EV-adoption scenario that might push the peak closer to 2040. If that scenario plays out, peak gasoline demand may not occur until well after the base case projection in 2028.

Theoretically, 1 million battery-powered vehicles displacing 1 million internal combustion vehicles amounts to a slide of just 20,000 b/d in petroleum demand. Gasoline is not the star of the show for Goldman, however. Demand for motor fuel may peak by 2028, but burgeoning petrochemical demand may more than offset the gasoline decline. Most of the global oil demand growth should come from Asian emerging markets, Goldman said.

The bank is very bullish on refining and said that the global refining upcycle is likely to be much longer than investors anticipate. The investment house said it sees global refining utilization trending well above historical average levels during 2024-2027 where a combination of announced closures and potential new capacity delays should elevate margins. For example, Goldman predicted that China will see demand growth average 1.5 million b/d in the period but calculates that only 800,000 b/d of refinery additions are in the development pipeline.

Analysts also invoked a recent study by Wood Mackenzie that holds that about 3.6 million b/d of global capacity is at high risk of closure over the longer term. That all adds up to a tight setup for global refining in the next few years.

With refined products, Goldman has much more bullish sentiment about distillate versus gasoline. Analysts don't see peak demand for diesel until 2034 and stress that medium- and heavy-duty trucks will present challenges for electrification. Meanwhile, jet fuel demand should accelerate toward 2040 thanks to steadily higher income growth for global consumers. China should contribute over 50% of the jet fuel demand growth in the period, according to the bank.

The overall bullish backdrop puts a halo on investment for several sectors. The global beneficiaries of refining strength include Thai Oil, S-Oil, Reliance Industries and Repsol. Among North American refiners, Goldman has buy recommendations on HF Sinclair, Marathon and Phillips 66. They also recommend biofuels leaders such as Neste and Calumet, thanks in part to their exposure to sustainable aviation fuel.

On the upstream side, the bank targets investments in Shell, Petrobras, CNOOC, Cenovus and Canadian Natural Resources.

This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.

--Reporting by Tom Kloza, tkloza@opisnet.com; Editing by Michael Kelly, mkelly@opisnet.com

(END) Dow Jones Newswires

May 28, 2024 12:46 ET (16:46 GMT)

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