Global jet fuel demand is poised to soften as a slowdown in consumer spending hits travel budgets, a shift that could weigh on oil prices in the months ahead. Global oil demand has not met expectations in the first half of 2024 due to weaker-than-forecast consumption in the U.S. and China, the top two oil markets. Jet fuel makes up about 7 percent of global oil demand and was widely expected to be a pillar of growth this year as travel continued to rebound from the pandemic.
\nGlobal jet fuel demand averaged about 7.49 million barrels-per-day (bpd) this year through July, a nearly 500,000-bpd increase over the same period last year, according to Goldman Sachs data.
\nDemand will need to rise faster in the months ahead to meet the bank\u2019s growth forecast of 600,000 bpd for the year. That looks less likely, with Goldman Sachs estimates signaling demand growth from August through October at only around 400,000 bpd. Major US airline operators and travel companies in recent days echoed worries that consumer spending is slowing as disposable incomes have shrunk, which should weigh on leisure travel.
\nUS consumer spending growth averaged just 0.3 percent in the three months through June, the slowest increase in over a year. \u201cWe see limited scope for further gains for (US) jet fuel, traditionally the most macro-driven product category, as a cooling economy weighs on demand for air travel,\u201d the International Energy Agency (IEA) said on Tuesday. Jet fuel demand in the US dropped sharply from a post-pandemic high of 1.95 million bpd in the week ended Aug 2, to just 1.6 million bpd last week, the EIA reported on Wednesday.
\nWeaker economic activity could also worsen a slowdown in global trade, which would cut air freight demand, Bank of America analysts said. They noted that global trade has been experiencing a slowdown over the past few years as demand in the US and Europe has shifted to services from goods.
\nThis week, the Organization of the Petroleum Exporting Countries cut its 2024 oil demand forecast for the first time since it was issued in July 2023, while the IEA trimmed its 2025 estimate. Both cited weaker-than-expected economic growth in China and elsewhere among the reasons for the downgrade. A global tech outage that grounded scores of flights for a few days in July has also impacted jet fuel demand. It was likely the reason that US jet fuel consumption fell by about 10,000 bpd year-over-year in July, the IEA said.
\n\u201cIn sum, macro conditions for transportation fuels are deteriorating pretty quickly,\u201d Bank of America analysts said. \u201cWith this background in mind, we believe that the broader demand trends for jet fuel remain soft,\u201d they said.
\nSome longer-term factors, such as changes in consumer behavior and improved technology, are also hitting consumption. Improved efficiency and mileage in newer aircraft means airlines are carrying more passengers over longer distances while burning less fuel, Rystad analyst Wei Ran Gan said.
\nThe average fuel economy of US commercial carriers rose to 65.5 seat miles per gallon in 2023, from 64.9 in 2019. Seat mile is an aviation industry term used to measure airline capacity. A post-pandemic shift in consumer preferences for shorter domestic flights over international destinations has also hurt demand, Bank of America analysts said. Meanwhile, years of trade wars between the US and China have cut air traffic between the countries to a quarter of what it was five years ago, Goldman Sachs analysts said.
\nInternational travel out of Russia has slumped 40 percent from 2019 levels as many borders have been closed to Russian passengers since Moscow\u2019s invasion of Ukraine in 2022, they added. \u2013 Qatar Tribune<\/p>\n","protected":false},"excerpt":{"rendered":"
Global jet fuel demand is poised to soften as a slowdown in consumer spending hits travel budgets, a shift that could weigh on oil prices in the months ahead. Global oil demand has not met expectations in the first half of 2024 due to weaker-than-forecast consumption in the U.S. and China, the top two oil …<\/p>\n","protected":false},"author":1,"featured_media":16863,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_bbp_topic_count":0,"_bbp_reply_count":0,"_bbp_total_topic_count":0,"_bbp_total_reply_count":0,"_bbp_voice_count":0,"_bbp_anonymous_reply_count":0,"_bbp_topic_count_hidden":0,"_bbp_reply_count_hidden":0,"_bbp_forum_subforum_count":0,"_monsterinsights_skip_tracking":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false,"_wpscppro_dont_share_socialmedia":null,"_wpscppro_custom_social_share_image":0,"_facebook_share_type":"default","_twitter_share_type":"default","_linkedin_share_type":"default","_pinterest_share_type":"default","_linkedin_share_type_page":"","_instagram_share_type":"default","_medium_share_type":"","_threads_share_type":"","_google_business_share_type":"","_bluesky_share_type":"","_mastodon_share_type":"","_selected_social_profile":null,"_wpsp_enable_custom_social_template":false,"_wpsp_social_scheduling":{"enabled":false,"datetime":null,"platforms":[],"status":"template_only","dateOption":"today","timeOption":"now","customDays":"","customHours":"","customDate":"","customTime":"","schedulingType":"absolute"},"_wpsp_active_default_template":true},"categories":[96,102],"tags":[],"class_list":["post-16862","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-aviation-world","category-featured-en"],"yoast_head":"\n