Signs have started to emerge in recent weeks that oil demand is recovering and could rebound to stronger levels in the second half of this year.
The oil market and forecasters have been expecting this latter-year recovery since the beginning of 2021.
Currently, oil demand trends in different regions are mixed, with the picture in Europe clouded by renewed lockdowns and chaos with vaccination programs in many countries.
But travel and consumption patterns in the world’s top oil consumer, the United States, and in the world’s top oil importer, China, point to recovering demand for petroleum products. Those two countries—major consumers of crude—could lead global oil demand out of the woods and lead the global consumption rebound later this year.
Travel statistics show that U.S. consumers are driving and flying this month at the highest rate since the pandemic forced the United States into stay-at-home orders and lockdowns in March last year. Chinese demand for road fuels is back to pre-COVID levels, with airline travel also rebounding from last year’s lows.
Even in Europe, where lockdowns are still in force or just reinstated, signs emerged from the UK that consumers would board a plane to a sunny summer destination as soon as the UK relaxes international travel restrictions.
As recent months have shown, the global oil demand recovery will not be a straight line up, with unknowns around virus variants and vaccination passports. Related: Oil Sees Biggest Single-Day Loss Since April 2020
Nevertheless, data out of the United States is encouraging, in both road and airline travel, while airline executives believe the recent uptick in bookings could be the first real sign that recovery is underway.
Weekly U.S. gasoline demand in the week to March 20 reached pre-COVID level seasonally, Patrick De Haan, head of petroleum analysis for GasBuddy, tweeted on Sunday. According to GasBuddy data, U.S. gasoline demand on Saturday rose by 9.5 percent compared to the previous Saturday, closing the week with a 5.9-percent rise, and officially the first week of demand that exceeds the pre-COVID week of March 8, 2020 by 0.18 percent, De Haan said.
Routing requests in the United States have surged by 53 percent since January 20, 2020, with the increase occurring this year, according to Apple’s Mobility Trends Reports measuring searches for directions.
In addition, figures from the U.S. Transportation Security Administration show that more than 1 million travelers passed through checkpoints at U.S. airports for 10 consecutive days through March 20. While the numbers are still around half the traveler throughput compared to the same days in 2019, they were more than double the traveler throughput from March 20, 2020, when flights began being grounded and people stopped flying.
Last Thursday, March 18, TSA screened 1,407,223 people at security checkpoints—the last time throughput was this high was on March 15, 2020, when 1,519,192 people passed through TSA checkpoints, TSA Public Affairs spokesperson Lisa Farbstein tweeted on Friday.
“We’ve seen some glimmers of hope over the last year, but they’ve been false hope,” Delta Air Lines CEO of Ed Bastian told The Wall Street Journal last week. “But this seems like it’s real,” Bastian added. Related: Aramco’s 2020 Profits Fell By 44%
In the UK, where more than half of the adult population have now received at least one dose of a vaccine, bookings for summer vacations in Span, Portugal, and Greece soared in the days after authorities said summer could be the season for boarding a plane safely again.
“The tickets issued in the week of the announcement, February 22, reached almost four times the volume of tickets issued in the week before. It is clear that consumer demand is patiently waiting for governments’ decisions to make key moves,” Luis Millan, Market Research Manager at travel analytics company ForwardKeys, said.
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In China, domestic airline passenger numbers jumped almost three times in February 2021 compared to February 2020, when flights were mostly grounded, Bloomberg quoted the local civil aviation administration as saying.
Globally, with 81,442 commercial flights tracked on March 19, the world moved above a 2020 same-day total for the first time this year, global flight tracking service Flightradar24 said.
Global oil demand may not return to pre-COVID levels by 2023, as per the International Energy Agency (IEA) estimates. Yet, major oil-consuming nations such as the United States and China show signs of road and airline mobility hitting high levels not seen since the start of the pandemic, which bodes well for fuel demand. Summer travels and pent-up demand after months of lockdowns later this year could prove right the majority of analysts who expect global oil demand to rebound in the second half of 2021.
By Tsvetana Paraskova for Oilprice.com
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