Rystad Energy: Jet fuel to be hit hardest by coronavirus
Among the various fuel sectors, jet fuel is expected to be hit the hardest by coronavirus.
“We expect global commercial air traffic will fall by approximately 20 percent this year versus the levels seen in 2019, which we estimate stood at around 99,700 flights per day,” the company said in its report.
The company recalls that many distressed airlines are now facing heavy cost cuts, laying-off unprecedented numbers of employees and many non-essential routes are likely to be closed.
“As a base case we now assume that the common summer air travel peak will not occur at all this year. We now see jet fuel demand falling by 12 percent year-on-year, equating at least 800,000 bpd. Last year’s demand for jet fuel was seen at about 7.2 million bpd.”
Rystad Energy believes that global demand for road fuels will fall by 2.2 percent, or 1.1 million bpd year-on-year, a strong downgrade from last week’s report, where road fuels were expected to stay mostly flat.
“Road fuel demand in 2019 is estimated to have reached 49.7 million bpd. Prior to the coronavirus we expected this demand segment to grow to 50.3 million bpd in 2020, but we now see it reaching only about 48.6 million bpd,” the report says.
Almost all of this reduction will occur due to decreased road traffic in the first half of 2020, according to the company.
“In China alone, demand for gasoline and diesel road fuel was down by about 1.5 million bpd in February. Traffic in the country is now gradually returning to more normal levels.”
The company said that oil demand now projects a decrease of 2.8 percent, or 2.8 million barrels per day (bpd) year-on-year.
“Our estimates show that total oil demand in 2019 was approximately 99.9 million bpd, which is now projected to decline to 97.1 million bpd in 2020. To put the number into context, last week we projected a decrease of just 600,000 barrels. At the moment we expect the month of April to take the biggest hit, with demand for oil falling by as much as 11 million bpd year on year,” said Rystad Energy.