A very slow recovery in jet fuel demand will drag on global oil demand for at least another two years as overall passenger traffic numbers continue to be low and mandatory quarantines continue to stop people from traveling on international flights. Demand for gasoline has picked up from the lows in April when most of the world was under lockdown, but demand for jet fuel continues to languish and is expected to grow only marginally next year from a very low base in 2020, analysts and international agencies say.
A full recovery in jet fuel demand will probably have to wait until 2023, Bank of America (BofA) said in a recent commodities research report cited by The National.
The third quarter of 2021 will see the first meaningful rebound in jet fuel demand, before global demand returns to the pre-crisis level of around 8 million barrels per day (bpd) by 2023, according to the bank.
“The only way out of this for jet fuel seems to be a cure or a vaccine for Covid19,” The National quoted BofA as saying.
Vaccinating most of the population will likely take years, and vaccinating 2 billion people in the developed countries and China alone could take up to a year and a half, the bank says. And that assumes that a vaccine is indeed rolled out sometime next year, as reports suggest. And that’s not a certainty.
Recovery in the jet fuel segment will be the slowest and will lag a recovery in oil prices, according to BofA analysts.
Domestic passenger traffic in some countries such as China is up from the lows earlier this year, but international air travel continues to face headwinds as a resurgence in coronavirus cases brings back some restrictions that could discourage travel on commercial flights.
The UK, for example, ordered again on Sunday a 14-day self-isolation for travelers returning from Spain after a spike in COVID-19 cases in several Spanish regions, including in the city of Barcelona. Related: Oil Drops As Demand Recovery Stalls
Even in Asia, jet fuel refining margins slipped in the past week amid weak demand, and a trader in Singapore told Reuters that “The jet fuel market in Asia is still very volatile. Any strength in demand is not sustainable.”
Jet fuel is and will continue to be the worst-hit fuel in the pandemic, and second-wave or not, it is expected to take much longer to recover to the pre-COVID-19 levels than other fuels, Rystad Energy said in its latest oil demand projections.
Jet fuel demand will only partially recover next year, rising by just 800,000 bpd from this year’s low levels, as international travel will continue to be under pressure for the entire 2021, OPEC said in its first look into 2021 oil demand. Overall global oil demand is expected to rise by 7 million bpd in 2021, after an 8.9-million-bpd drop this year, the cartel said in its July Monthly Oil Market Report (MOMR).
The International Energy Agency (IEA) sees global oil demand rising to 97.4 million bpd in 2021, compared to an estimated 2020 demand as of July at 92.1 million bpd. Average global oil demand next year is expected to be 2.6…