Return of long-haul flights to boost oil demand
KUCHING: Analysts anticipate recovery in oil demand, with full recovery expected to be in 2022 particularly when most longhaul flights – which consume more fuel – are back in the fold.
For example, as pandemic restrictions are gradually easing across most of Europe, the research arm of Public Investment Bank Bhd (PublicInvest Research) believed there will be a resurgence in fuel demand for travel, not only in gasoline and diesel but also in jet fuel as travel and tourism gradually picks up.
“Based on current trends, the International Energy Agency (IEA) has forecasted Europe’s oil demand to increase by nine per cent this quarter and four per cent in the third quarter (3Q),” PublicInvest Research said in its oil and gas (O&G) sector update.
“Meanwhile, commercial flights are currently back at two-thirds or about 63 per cent of pre-Covid levels according to Flightradar24 data, the most activity since air traffic slumped a year ago.
“In the US, foot traffic in airports has picked up, with a run of over one million daily passengers recently.”
The research arm recalled that the flow of gasoline and diesel from refineries on the US Gulf
Coast to Mexican ports also accelerated from February into March as the country’s resorts prepared for the arrival of tourists over spring break.
“We foresee recovery in oil demand is on track with full recovery expected to be in 2022 particularly when most longhaul flights which consume more fuel are back in the fold.
“The reopening of international travel and quarantine-free vacations abroad will be a big boost to jet fuel demand.”
That said, PublicInvest Research noted full recovery is highly dependent on how fast Covid-19 is being contained in the Southeast Asia.
“While China’s demand is booming, there are quite number of other Asian countries which are going back into lockdowns.
“While India continues to grapple with its Covid-19 cases, new daily case counts have surged more than double elsewhere in the region such as Malaysia, Thailand, Vietnam, and Cambodia.
“In response to this, new restrictions including business closures have gone into effect. This situation is further exacerbated by the slower vaccination rates in the country.”
Based on current trends, the International Energy Agency (IEA) has forecasted Europe’s oil demand to increase by nine per cent this quarter and four per cent in the third quarter (3Q).
PublicInvest Research