OIL: BofA Cautious on Oil Demand Growth; Sees EVs, Renewables Ousting Petroleum

BofA Cautious on Oil Demand Growth; Sees EVs, Renewables Ousting Petroleum -- OPIS

• Bank of America on Wednesday issued a downbeat outlook on long-term crude oil demand, saying global oil consumption would peak in the early 2030s due to a combination of displacement by EVs and renewable fuels as well as an uncertain world economy.
• The bank’s note predicted global energy consumption will grow at an annual rate of below 3% into 2030 despite talk of demand from artificial intelligence and data centers. After 2030, BofA expects oil use may struggle to increase above 1% year to year, as emerging Asian economies instead of the West will be driving oil growth.
• The bank said its bearish oil demand forecast has factored in limited oil-to-electricity substitution amid slowing EV sales in the U.S. and E.U., as well as the Trump administration slashing subsidies on EVs, charging structure and other renewables energy like wind power. However, the sales of battery-based vehicles and renewable energy sources in China are growing at a fast pace due to their low cost, BofA said.
• The bank expects the petrochemical sector to lead global oil demand into 2030 amid fading gains in gasoline and diesel sales. However, the use of NGLs as feedstocks will likely outpace demand for crude-based fuels like naphtha, limiting the growth of crude runs even as refining capacity expands, it said.
• BofA said it now predicts global oil demand to increase by 1.1 million b/d this year and 1 million b/d in 2026, with the annual growth slowing to just about 440,000 b/d, or 0.4%, to 108 million b/d in 2030.
• Still, BofA said prices will remain the most important factor to affect the path for oil demand into 2030, as ample spare production capacity and stable prices could support oil demand over the next few years despite struggling consumption by oil refiners.