Europe’s oil demand, especially road fuel consumption, has rebounded in recent weeks, as many Europeans hit the road for late summer vacations after a year and a half of restrictions and lockdowns.
Airline traffic in Europe is still 30 percent below pre-COVID levels from 2019, but road fuel demand has strengthened this summer, estimates by Bloomberg showed on Monday.
Before the summer, Europe was a major drag on global oil demand with still depressed traffic on the roads. But once the late spring and summer came, Europeans in the biggest economies—where consumption is the highest—hit the roads.
IHS Markit estimates that Europe’s gasoline demand may have reached its highest level for August in ten years.
“August 2021 would be the best month of August since 2011,” Hedi Grati, an executive director at IHS Markit, told Bloomberg.
“The ten years in between were all lower,” Grati added.
The higher gasoline demand was driving the rebound in Europe’s oil demand this summer just as Asia’s fuel demand started to falter amid the resurgence of COVID cases in many major Asian economies, including China, Japan, and most of Southeast Asia.
As a result of stronger European road fuel demand, independently held gasoline stocks in the Amsterdam-Rotterdam-Antwerp (ARA) hub fell to the lowest since 2016 in the middle of August, according to data from petroleum industry consultancy Insights Global.
“The fall in gasoline, combined with a larger fall in fuel oil stocks, prompted total products inventories to fall — the lowest total volume since March 2020,” Insights Global said.
The higher fuel demand has led to increased interest in light sweet crude grades among refiners in Europe, traders tell Bloomberg.
Overall, gasoline traders told Bloomberg that Europe’s fuel demand this summer has been level with or even higher than in the 2019 holiday period.
By Charles Kennedy for Oilprice.com
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Dr Mamdouh G Salameh
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Visiting Professor of Energy Economics at ESCP Europe Business