Washington D.C September 7 2021: Oil demand markers in most of the world's biggest consuming countries recovered to hit a post-pandemic high in the final week of August, according to mobility data, suggesting key economies have bounced back from the outbreak of COVID-19's delta variant faster than expected.
Global mobility, a key barometer for gasoline and diesel demand, improved to average 11.8% below pre-COVID levels in most of world's top oil users excluding China, according Google data, marginally above the most recent post-pandemic high on July 21.
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Based on mobile phone activity, the figures reflect adjusted data provided by Google covering 13 countries which combined account for half of the world's total oil demand or some 50 million b/d.
The figures show recent measures to curb a summer spike in COVID-19 cases were already easing.
In Asia's top oil consumers outside China, mobility hit a post-pandemic high of 9.7% below pre-COVID levels after mobility improved in Japan, India and South Korea, and Russia, the data showed.
In the US, the world's biggest oil consumer, mobility was little changed at 17% of pre-COVID levels but average mobility in Europe's top five economies improved on the week to 13.4% below pre-COVID levels, according to the data.
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New variant threat
In China, the world's second-biggest oil consumer and biggest importer, subway traffic in major cities improved in the week -- and with apparently no reported COVID-19 cases on some days -- China added another 1.5 million seats across its domestic airline networks in the week to Aug. 30.
Despite rising mobility, uncertainty over the pace of global oil demand recovery this year remains focused on the potential for new infectious COVID strains that could evade vaccine effectiveness, according to S&P Global Platts Analytics.
"Global COVID trends look a bit more promising of late, however, two new variants may give rise to the next wave of outbreaks though it is too soon to say," Platts Analytics said in a Sept. 1 note.
Platts Analytics estimated that global demand for key transport fuels gasoline and diesel was closing on pre-COVID-19 levels at 26.3 million b/d and 28.8 million b/d, respectively, in August and will fully return to 2019 levels by the end of 2021.
Gas-to-oil switching
In the fourth quarter of 2021, record gas prices in Europe and high LNG prices in Asia were expected to spur gas-to-oil switching in the power generation sector, according to Platts Analytics.
In Asia alone, oil demand was expected to grow by about 2.5 million b/d in the final quarter after failing to post any growth in the previous quarter, with a growing impact of gas-to-oil switching.
"Potentially given the high gas and LNG prices…the oil demand impact could range from 250,000-300,000 b/d from October to March next year in Asia and Europe," Platts Analytics head of global macro, demand,and Asia analytics Kang Wu said in a recent presentation.
By the end of 2022, Platts Analytics expects gasoline and diesel demand to be some 800,000 b/d above 2019 levels but jet fuel could still be 10% below 2019 levels, he said.
Jet demand improving
Meanwhile, the demand recovery for jet fuel has continued to lag diesel and gasoline due to ongoing curbs on national, regional, and international travel.
Global scheduled airline capacity for the period starting Aug. 30 was up 3% week on week, according to aviation data company OAG, to average 31.4% below comparable 2019 levels.
Scheduled airline capacity in China-dominated Northeast Asia for the period starting Aug. 30 rose 9% week on week, according to OAG, to average 27% below comparable 2019 levels. The country shut down much of its domestic aviation market at the beginning of August.
Jet fuel and kerosene demand globally will likely remain close to 1 million b/d below pre-pandemic levels by the year end, according to Platts Analytics, with aviation jet demand not seen fully returning to 2019 levels before 2026.
