Global oil demand may not recover to 2019 levels until at least 2022, Raymond James analysts said in a May 11 report offering their views of the "new normal" following the advent of COVID-19.

For lack of an effective vaccine or treatment, the analysts expect the global oil market will take a 5.0 million-barrel-per-day hit to demand in 2021, followed by a 1.25 million-bbl/d hit each year thereafter, versus what demand would have been had there never been a COVID-19 pandemic.

The analysts project that the jet fuel market will take a 2 million-bbl/d hit to demand in 2021, while the road transport market, comprised of gasoline and diesel, will take a 1.6 million-bbl/d hit. They project industrial and petrochemical demand will be 1 million bbl/d lower than it would have otherwise been, and the marine fuel market will be down 400,000 bbl/d as COVID-19 lingers.

"Supposing that a vaccine will become developed and approved (on an emergency basis) by regulators sometime this fall — which is the best-case scenario, dramatically faster than any previous vaccine development process — that does not mean that billions of people will be able to get it for the coming winter," the analysts said. Instead they expect front-line healthcare workers and high-risk individuals will receive vaccinations first, while the broader population would not receive theirs until toward the end of 2021.

"Our initial forecast for demand impact in 2021 … would have been exceptionally bearish under any normal circumstances, but let's be candid: that is nothing compared to how the past few months have been," the analysts wrote. "The timing of economic reopening decisions by governments, traffic congestion data, and commentary by refiners all point to April having been the peak of COVID's demand impact, with the rest of Q2 looking better, and an uncertain but directionally improving picture for the second half of the year."

Tudor Pickering Holt & Co. analysts said May 11 that investors' belief the petroleum market is past the worst of the demand crisis has led refiner stocks to recover 40% quarter-to-date.

"Despite increasing investor optimism, the … futures curve paints an extremely bleak outlook going forward," they said. For the U.S. East Coast market, forward prices indicate refining margins of less than half of the midpoint of the $9.42 per-barrel range seen from 2013 to 2019, they said, with the main driver of weakness being gasoline prices.

"We're concerned that gasoline demand will face headwinds from substantial unemployment and people working from home," they said. "Diesel futures are also coming in much softer, with the H2'20-21 curve $5.49 [per barrel] below 2013-19 levels. Here the challenge is more on the supply side, as refiners have been shifting unwanted jet [fuel] into the diesel pool. … If the current curve does come to fruition, the next 18 months will be extremely challenging for U.S. refiners."

In response to lost demand from shelter-in-place orders meant to stem the spread of the virus, U.S. oil refiners have been operating their facilities at minimum levels and even idled some.

Although they see signs that petroleum demand is starting to recover as state governments begin to lift restrictions, most — with the exception of Delek US Holdings Inc. — are waiting for clear signs of a sustained demand recovery before they ramp petroleum production higher.