While global oil demand is set to rebound with a V-shaped recovery, demand for jet fuel will continue to languish for at least another two years, cut by significantly reduced business travel, Goldman Sachs says, as carried by Business Insider.
"We believe oil will exhibit a V-shaped recovery, but supply will exhibit an L shaped recovery," Goldman Sachs' head of global commodities research, Jeff Currie, said at a virtual briefing attended by Business Insider.
However, jet fuel demand will not return to the pre-virus levels until Q3 2022, according to Currie.
"You are going to lose a big chunk of the jet demand that would have been associated with business travel," he said.
Boeing CEO Dave Calhoun said on Boeing's Q1 earnings call at the end of April:
"We believe this industry will recover, but it will take two to three years for travel to return to 2019 levels, and it will be a few years beyond that for the industry to return to long-term growth trends."
So far into the pandemic, jet fuel was the oil product with the largest decline in demand relative to 2019, the International Energy Agency (IEA) said in its Global Energy Review 2020 report earlier this month.
Rystad Energy also sees jet fuel demand being hit the hardest, assuming as a base case that "the common summer air travel peak will not occur at all this year."
Jet fuel demand globally is set to plunge by 33.6 percent on the year in 2020, or by at least 2.4 million bpd from last year's demand for jet fuel of about 7.2 million bpd, Rystad said in its latest assessment on oil and fuels demand last week.
Oil demand could rebound enough to exceed supply by the end of May, Goldman's Currie said last week, noting that this would be in no small part because of the production cuts implemented by all major producers.
However, there are some 1.2 billion barrels in storage, Currie added, that would need to be drawn down before oil prices materially improve.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More
Comments
Coronavirus will be a common disease like Pneumonia or cold, cough infection. So flying will be even more after the fear is gone.
Let's have a look at some important facts.
Even without the vaccine & medicine for Covid-19, it is not killing all. Mortality rate is only 3-4%. Now, we have treatment, medicines for Pneumonia, but still we have around 1.1% mortality rate for pneumonia & in fact the infection cases are 10-100 times more than Covid-19.
you know what?
Just forget it.
Lockdown was a fear phobia influenced decision of leaders who are not well educated in the field of Science, Tech, medicines.