Mobile offshore drilling units stand in the port of Cromarty Firth in Cromarty, UK on Tuesday 23 June 2020.
Jason Alden | Bloomberg | Getty Images
Oil service provider Baker Hughes Lorenzo Simonelli said this week that energy demand will recover in the second half of 2021.
“We are cautiously optimistic,” he told CNBC’s Steve Sedgwick on Monday.
He noted that some countries are still linked to coronavirus, which decimated demand in 2020 and may weigh on fuel sales in the first half of the year.
However, he expects demand to recover in the second half of the year due to the launch of the vaccine and the improvement in the economic situation.
The CEO’s views were in line with OPEC’s January report on the oil market Vaccinations create a certain “upward optimism” and the forecasts for 2021 assume a “healthy recovery in economic activity”.
The alliance expects global oil demand to rise by 5.9 million barrels per day to an average of 95.9 million barrels per day.
Meanwhile the International Energy Agency predicts that global oil demand will recover to 96.6 million bdp this year. It lowered its forecast slightly, citing rising Covid cases and new bans.
As vaccines put fundamentals on a stronger growth path, it will take longer for demand to fully recover, the IEA said.
Simonelli said there would be “investment opportunities” when the rebound takes place.
“It will be different geographically in different places,” he said. “If we look at the lower-cost pools, look at the Middle East. That is where you will see some of the increases in production.”
Brazil and Norway could also increase production in the second half of 2021, he added.
US shale producers are likely to be “subdued,” he said. “There is a lot of capital discipline [and] Obviously we are also going through an energy turnaround. “
He said North America would grow in volume quickly historically, but that could change this time around.
“We believe this will be different just given the capital discipline and focus that producers have on … returns and cash flows and restricting some of the capital inflows,” he said.
– CNBC’s Sam Meredith contributed to this report.