Although global oil demand has come roaring back to about 89% of pre-coronavirus levels, it is expected to plateau around 92-95 million b/d, or 92-95% of pre-Covid levels through the first quarter of 2021, according to a new analysis by IHS Markit.

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“The meteoric rise of world oil demand from the lowest lows of the Covid crash is going to come up just short of a full comeback, at least for now,” said IHS Markit’s Jim Burkhard, vice president and head of oil markets. “For demand to fully return, travel – especially air travel and commuting to work – needs to get back to normal.

“And that won’t happen until there is containment of the virus and effective vaccines.”

World oil demand has swelled by 13 million b/d over the last four months since bottoming out in April amid the pandemic-induced containment measures and economic slowdown, the IHS team said.

Demand now sits at 89% of prior year levels, up from 78% in April.

The number of air flights globally is now at about 30% below February levels, versus 78% below in April, researchers said. However, actual jet fuel consumption is still 50% below prior year levels since shorter-distance flights have recovered more quickly than long-haul flights.

After falling to 50% of prior year levels in April, U.S. retail gasoline sales rebounded sharply as well, but have since stalled at around 17-18% below 2019 levels, researchers said.

U.S. gasoline sales are bigger than total oil demand for any other market except mainland China, underscoring U.S. gasoline’s importance as a proxy for gauging total global oil demand, the IHS team said.

Burkhard noted that, “Hitting the pause button on demand growth doesn’t mean a return to the supply overhang that cratered prices back in April,” explaining that the Organization of the Petroleum Exporting Countries and its allies, aka OPEC-plus, “have rediscovered production restraint since then and U.S. output is expected to be lower as well.

“That means that markets can continue to rebalance, even if a full return to pre-Covid demand levels is put off for the time being.”

The International Energy Agency, for its part, said in its August Monthly Oil Market Report it expects global oil demand to average 91.9 million b/d in 2020, down 8.1 million b/d from 2019, and that it has lowered its 2021 demand estimate by 240,000 b/d to 97.1 million b/d, “mainly due to aviation sector weakness.”

Analysts at Tudor, Pickering, Holt & Co. (TPH) also noted Tuesday that the resurgence in air travel is beginning to level off.

Citing data from Flightradar24, TPH analysts observed that the seven-day moving average for global daily flights was up about 1% week/week at about 153,000 flights.

“This is the second week in a row of only small improvement,” TPH analysts said, “which starkly contrasts from July when flights rose 15% from the beginning of the month.”