The recovery in demand for jet fuel stalled

After an upbeat start to the summer that boosted jet fuel demand, analysts are now warning that global jet fuel demand is set to slow in tandem with consumer spending, with the potential to weigh heavily on oil prices.

Weaker-than-expected consumption in the United States and China is now holding back growth in demand for the fuel, which typically accounts for about 7 percent of global oil demand, Reuters reported.

Based on Goldman Sachs data, reported by Reuters, global jet fuel demand through July this year averaged about 7.49 million barrels per day, a significant increase of 500,000 bpd from the same period in 2023 .

However, while Goldman Sachs forecast fuel demand growth for 2024 to 600,000 bpd, a slowdown in consumer spending could put the brakes on it, with airlines warning this week and last time that they fear a drop in spending for leisure travel.

This week’s sentiment on jet fuel has changed dramatically from earlier this summer, when Chinese refiners in particular began to celebrate improved margins, with total air traffic in China rising 14% in June compared to the same period in 2019, even before COVID-19. 19, Bloomberg reported last week.

In JuneThe total number of passengers on global airlines was set to reach a record 4.96 billion, according to the International Air Transport Association (IATA). At the time, IATA Director General Willie Walsh said: “With a record five billion air travelers expected in 2024, the human need to fly has never been stronger.”

Last week, travel companies forecast a slowdown in leisure travel, with Americans in particular saying they were holding back on bookings due to an uncertain economic outlook, Reuters reported.

“They have less disposable income, less disposable income and (less) ability to do anything, including travel,” Hilton Worldwide CEO Christopher Nassetta said during a call last week, indicating that the boom- of consumer spending on post-Covid travel. an end.

Ryanair cut its forecasts last week, warning investors of “materially lower” summer fares. The airline saw its first quarter profit fall by almost 50%.

By Michael Kern for Oilprice.com

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