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Petroleum & Other Liquids

This Week in Petroleum

Release date: July 29, 2020  |  Next release date: August 5, 2020

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COVID-19’s impact on global commercial jet fuel demand has been significant and uneven

Efforts to contain the 2019 novel coronavirus disease (COVID-19) have dramatically reshaped markets for key petroleum fuels, and consumption patterns for jet fuel have seen some of the largest changes. According to the International Energy Agency, global jet fuel demand averaged 8.0 million barrels per day (b/d) in 2019, which is less than both gasoil/diesel demand (28.9 million b/d) and gasoline demand (26.4 million b/d). But, air travel—and by extension jet fuel demand—has proved particularly vulnerable to the disruptions caused by COVID-19 mitigation efforts. As of July 29, 2020, of the 37 member states of the Organization for Economic Cooperation and Development (OECD), 32 are partially or completely closed to international air travel as a result of COVID-19 mitigation efforts. Only four remain free of restrictions, and one is in the process of reopening soon, according to data from travel company Booking Holdings Inc. In addition, air travel’s high passenger density requirements, large share of nonbusiness travelers, and the long distances involved have further dampened demand.

Although COVID-19 mitigation efforts have reduced demand for all transportation fuels, demand for jet fuel has likely declined the most in relative terms. For instance, in the United States—the world’s largest jet fuel consumer—average jet fuel product supplied (a proxy for consumption) in June 2020 was 41% of what it had been in June 2019, compared with 86% for gasoline and 88% for diesel fuel, according to the July edition of the U.S. Energy Information Administration’s (EIA) Short-Term Energy Outlook (STEO).

To estimate global changes in jet fuel consumption, EIA recently began using data from aviation company Cirium that detail each scheduled commercial passenger flight since January 2019, including the type of aircraft flown and its route. Using data on each flight’s origin and destination, EIA calculated the great-circle distance (which measures the straight-line distance between two points along the earth’s surface) for each flight. EIA then increased that distance by 10% per flight to compensate for the excess distance airplanes fly on average relative to the shortest, optimized path. After factoring in the average fuel efficiency of each flight’s aircraft (including fuel used during takeoff, landing, and taxiing), EIA estimated the volume of jet fuel consumed by each flight and summed these flights to estimate the volume of jet fuel consumed globally by commercial passenger flights (Figure 1).

Figure 1. Global commercial passenger flights (year-to-date 2020)

According to EIA’s estimates, consumption of jet fuel by commercial passenger flights averaged 1.6 million b/d during the first two weeks of July, 69% less than the level one year ago and 66% less than the January 2020 monthly average of 4.6 million b/d. As expected, the largest decline in the global demand for jet fuel occurred during March and April, coinciding with intensified efforts to mitigate the spread of COVID-19. Like many other economic performance metrics, global jet fuel demand has recovered more slowly than it initially declined. Globally, consumption of jet fuel by commercial passenger flights declined by 0.7 million b/d between February and March and by 2.4 million b/d between March and April, while demand grew by only 0.1 million b/d and 0.3 million b/d during the next two months, respectively. Assuming that fuel consumption occurs in the country from which a flight departs, similar trends are also occurring at the region and country levels (Figure 2).

Figure 2. Estimated jet fuel consumption of commercial passenger flights (year-to-date 2020)

Although the timing of a market’s initial decline and low-point varies (largely reflecting the timing of the spread of COVID-19), jet fuel demand in nearly every major market has recovered from the lows of April and May. The extent of this recovery has not been equal, however. Although average June 2020 consumption of jet fuel by commercial flights in China (including Macau and Hong Kong) was down 43% relative to the same time last year, consumption was down significantly more in other parts of the world:

  • 80% in the rest of the Asia-Pacific region;
  • 77% in the Middle East and North Africa;
  • 85% in the rest of Africa;
  • 75% in the United States;
  • 88% in the rest of the Americas;
  • 70% in the countries of the former Soviet Union;
  • 87% in Europe.

The Chinese market’s relatively advanced state of recovery, however, is likely to partially be a result of its earlier peak exposure to COVID-19. For instance, U.S. commercial passenger flights consumed 506,000 b/d of jet fuel (41% of the amount consumed at the same time last year) on July 13, 2020 (the latest data point in the analysis), 118 days after first reporting more than 100 new daily cases of COVID-19. By comparison, consumption in China (including Hong Kong and Macau) 118 days after it first reported more than 100 new daily cases was 350,000 b/d, or 52% of the amount consumed at the same time last year.

The share of air travel that occurs within a country’s borders also influences the degree to which its demand for jet fuel has declined. As the International Air Transport Association noted in the May edition of its Air Passenger Analysis, “[d]omestic markets are expected to lead the industry recovery from the crisis” because of the less severe restrictions on domestic travel, the shorter distances typically involved, and the larger share of domestic air travel that is non-discretionary. Consequently, interior airports that cater primarily to domestic air travel have generally recovered faster than their typically coastal, more internationally oriented peers (Figure 3). This can be seen in the relative resurgence of jet fuel consumption by domestic flights. Despite constituting 30% of all jet fuel consumed globally by commercial passenger flights in June 2019, as of June 2020 the domestic flight share had grown to 56%, and the share consumed by international flights had decreased from 70% to 44%. This trend has been particularly true in China, where the share of jet fuel consumed by domestic flights rose from 53% in June 2019 to 83% in June 2020.

Figure 3. Estimated changes in average jet fuel consumption by airport, June 2020 vs June 2019

EIA’s methodology for estimating the volume of jet fuel consumed by commercial passenger flights is not without its limitations. Importantly, the estimate does not measure total jet fuel consumption because it incorporates neither non-passenger cargo flights nor general aviation—a category that consists of unscheduled flights such as those made by recreational pilots, helicopters, or travelers on private aircrafts. The estimate also excludes jet fuel consumed by military aircraft, which can be a significant source of demand in some markets, particularly those in the OECD, Russia, and China.

U.S. average regular gasoline and diesel prices fall

The U.S. average regular gasoline retail price fell more than 1 cent per gallon from the previous week to $2.18 per gallon on July 27, 54 cents lower than the same time last year. The Gulf Coast and Midwest prices each decreased nearly 2 cents to $1.86 per gallon and $2.08 per gallon, respectively, and the East Coast price fell more than 1 cent to $2.09 per gallon. The West Coast and the Rocky Mountain prices each rose by nearly 1 cent, remaining virtually unchanged at $2.82 per gallon and $2.32 per gallon, respectively.

The U.S. average diesel fuel price fell nearly 1 cent from the previous week, remaining virtually unchanged at $2.43 per gallon on July 27, 61 cents lower than a year ago. The Gulf Coast price declined nearly 2 cents to $2.18 per gallon, the Midwest price fell nearly 1 cent to $2.30 per gallon, and the East Coast and Rocky Mountain prices each fell by less than 1 cent, remaining virtually unchanged at $2.52 per gallon and $2.34 per gallon, respectively. The West Coast price was unchanged from the previous week at $2.95 per gallon.

Propane/propylene inventories rise

U.S. propane/propylene stocks increased by 2.0 million barrels last week to 84.4 million barrels as of July 24, 2020, 9.2 million barrels (12.2%) greater than the five-year (2015-19) average inventory levels for this same time of year. Midwest, Gulf Coast, and Rocky Mountain/West Coast inventories increased by 1.0 million barrels, 0.8 million barrels, and 0.3 million barrels, respectively. East Coast inventories decreased by 0.1 million barrels.

For questions about This Week in Petroleum, contact the Petroleum Markets Team at 202-586-4522.

Tags: air transportation , consumption/demand , demand response , international , jet fuel , transportation

Retail prices (dollars per gallon)

Retail price graphs
  Retail prices Change from last
  07/27/20 Week Year
Gasoline 2.175 -0.011 -0.540
Diesel 2.427 -0.006 -0.607

Futures prices (dollars per gallon*)

Futures price graphs
  Futures prices Change from last
  07/24/20 Week Year
Crude oil 41.29 0.70 -14.91
Gasoline 1.285 0.060 -0.589
Heating oil 1.256 0.037 -0.648
*Note: Crude oil price in dollars per barrel.

Stocks (million barrels)

Stock price graphs
  Stocks Change from last
  07/24/20 Week Year
Crude oil 526.0 -10.6 89.4
Gasoline 247.4 0.7 16.7
Distillate 178.4 0.5 42.5
Propane 84.404 2.016 7.974