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Agencies
New York
Demand for jet fuel may take years to recover from the Covid-19 pandemic and will lag behind an uptick in oil prices as air travel demand remains weak, especially in the absence of a vaccine, according to Bank of America (BofA).
A measured rebound is expected in the third quarter of 2021 before a full recovery in demand for the aviation fuel by 2023, the BofA Global Research said in a July 23 commodities report. The Organisation for Economic Co-operation and Development (OECD) countries and China will drive most of that uptick.
The recovery in jet fuel demand will be L-shaped as quarantine requirements and fresh outbreaks of Covid-19 in some cities curb air travel. An L-shaped recovery is a sluggish rebound that follows a deep recession with persistent unemployment and stagnant economic growth.
In terms of supply, while refiners have sharply reduced their jet output, stocks of middle distillates and jet remain “very high” in most locations, BofA said.
“The only way out of this for jet seems a cure or a vaccine for Covid19,” bank analysts said. “Yet creating 6 billion vaccines for 7.8bn people in the world could take several years. And even if most of the jet fuel demand recovery will come from OECD and China going forward, it could still take 12 to 18 months to vaccinate 2 billion people.”
Air traffic around the world collapsed following the Covid-19 outbreak as countries shut down their borders and airlines grounded their aircraft, leading to a crash in jet fuel demand.
Some freight and domestic passenger travel have started to pick up. Recent trends suggest air traffic between or within developed and emerging economies, may remain restricted until the end of the year.
New York
Demand for jet fuel may take years to recover from the Covid-19 pandemic and will lag behind an uptick in oil prices as air travel demand remains weak, especially in the absence of a vaccine, according to Bank of America (BofA).
A measured rebound is expected in the third quarter of 2021 before a full recovery in demand for the aviation fuel by 2023, the BofA Global Research said in a July 23 commodities report. The Organisation for Economic Co-operation and Development (OECD) countries and China will drive most of that uptick.
The recovery in jet fuel demand will be L-shaped as quarantine requirements and fresh outbreaks of Covid-19 in some cities curb air travel. An L-shaped recovery is a sluggish rebound that follows a deep recession with persistent unemployment and stagnant economic growth.
In terms of supply, while refiners have sharply reduced their jet output, stocks of middle distillates and jet remain “very high” in most locations, BofA said.
“The only way out of this for jet seems a cure or a vaccine for Covid19,” bank analysts said. “Yet creating 6 billion vaccines for 7.8bn people in the world could take several years. And even if most of the jet fuel demand recovery will come from OECD and China going forward, it could still take 12 to 18 months to vaccinate 2 billion people.”
Air traffic around the world collapsed following the Covid-19 outbreak as countries shut down their borders and airlines grounded their aircraft, leading to a crash in jet fuel demand.
Some freight and domestic passenger travel have started to pick up. Recent trends suggest air traffic between or within developed and emerging economies, may remain restricted until the end of the year.
