With travellers still hesitant to take to the skies, jet fuel is experiencing trouble gaining altitude while other oils continue to climb out of their nosedive.
Of the “Big 3” petroleum products – gasoline, diesel and jet fuel – demand for the latter still lags significantly below pre-Covid levels. With air travel’s continued volatility, jet fuel is causing the most pandemic-related damage to the industry, said Rory Johnston, managing director and market economist at Price Street.
The early days of Covid saw international flight restrictions and border lockdowns, causing jet fuel use to drop about 75%. While air travel has increased steadily in recent months, jet fuel consumption is still down at least one-third as of June 2021, compared to where it would be in normal times, Johnston told Capital.com.
Jet fuel is the most important demand recovery category in 2022, possibly contributing four million barrels per day (MMbpd) overall oil demand lift from June levels if pre-pandemic growth rates can be restored, he wrote in a newsletter.
“If jet fuel can regain that pre-Covid trend growth rate, ie there is no permanent post-Covid behaviour change, then jet fuel demand in this sample could rise by roughly 60% or almost two MMbpd (implying upwards of four MMbpd globally) from June 2021 levels,” he wrote.
Current air traffic statistics are mixed, but suggest “strong growth” in Canada, Japan and the US, while there are “weakening conditions” in China and India, he said.
The global decline of Covid cases will give a tailwind to jet fuel demands for the remainder of the year, but, Johnston warns, the “risk of reacceleration and continued mix of country-level recoveries –not to mention any potential for longer lasting behaviour change – push any likely global recovery to pre-Covid levels into mid-2022.”
The week ending, 8 October, A1 jet fuel prices ended up 5.8% at $94.60 a barrel, or $2.25 a gallon, well below the commodity’s high of $3.33 a gallon on 24 February 2012, according to the US Energy Information Administration.
On Wednesday, Delta Airline released its quarterly numbers.
The Atlanta, Georgia-based airline reported adjusted operating revenue of $8.3bn (£6.08bn) – which excludes refinery sales of jet fuel to others – was 66% recovered versus September quarter 2019 on capacity that was 71% restored, the company reported.