LONDON / NEW YORK / SINGAPORE – Renewed restrictions in Europe and the United States to combat the coronavirus have slowed the pace of recovery in fuel demand, offsetting a rebound in Asian economies where consumption is almost back to pre-COVID levels.
As the second wave of the virus hit many Western countries, governments imposed new lockdowns, closed restaurants and bars and banned gatherings. But the action was not as strict as in the first wave.
France, Great Britain, Spain and Poland are under the tightest lockdown in Europe, according to Oxford’s tight index assessing indicators such as school and work closures, as well as travel bans.
Graphics – Updated restrictions in Europe and the United States:
As a result, traffic in London, Paris and Madrid fell sharply in November after reaching a peak in October, according to data provided to Reuters by location technology company TomTom, covering mobility through Sunday evening.
“For now, we estimate roughly a drop in European oil demand of around one million barrels per day (bpd) month-on-month in November, of which around 80% of this decline can be attributed to the lockdown impact and the rest is monthly. seasonality, ”said Rystad Energy’s head of oil market, Bjornar Tonhaugen.
Road demand in November is usually lower than October.
Graphics – Renewed locks weigh on European mobility:
The IEA’s director for energy and security markets, Keisuke Sadamori, told Reuters that a new lockdown in Europe is likely to push the outlook for global oil demand toward a downturn, although less severe than the first round of lockdowns in April.
Analysts said the promising news about COVID-19 vaccine candidate Pfizer raising oil prices by 10% on Monday is unlikely to sway demand crash in Europe until the end of the year, although doing so could delay tougher restrictions in the United States.
Restrictions in Europe are worrying US markets, as some traders see more of the lockdown there as a harbinger for what’s to come in the United States.
“We’re just waiting for another shoe to fall in here,” said John Kilduff, partner at Again Capital in New York. “It looks like a rerun at the beginning of the year.”
The market is tacitly optimistic about a recovery in the US fuel market in late August – as have some schools reopening – but positive sentiment has evaporated.
Gasoline-supplied products – a proxy for demand – have fallen 9% since August, to 8.3 million bpd from 9.2 million bpd, Energy Information Administration data showed.
RESTORATION OF ASIA
By contrast, traffic in the Chinese capital Beijing has recovered significantly compared to the baseline in February and is not far from 2019 levels, according to TomTom data.
Demand for fuel in China, the world’s second-largest oil consumer, has returned to pre-COVID levels and is expected to grow this year as its economy recovers.
SIA Energy, a Beijing-based consultancy, said it expects China’s oil demand to grow 9%, or 1.34 million barrels per day, by 2020 to 16.4 million barrels per day.
In Moscow and Tokyo, road traffic is not far from pre-pandemic levels, according to TomTom data.
Graph – Traffic in Beijing on recovery:
India has suffered badly from the pandemic, but indicators of mobility in the country also remain resilient. Traffic in New Delhi and Mumbai is still increasing, albeit at a slower pace compared to July-August, according to TomTom data.
India’s gasoline and diesel sales in October have also risen above pre-pandemic levels.
Oil Minister Dharmendra Pradhan said at an industry conference on Monday that consumption of diesel and high-speed spirit motors in October last year exceeded last year.
“We anticipate that the recovery path for energy demand growth in India will persist in the coming months,” he added.
Reporting by Bozorgmehr Sharafedin in London, Stephanie Kelly in New York and Florence Tan in Singapore, additional reporting by Nidhi Verma in New Dehli; Edited by Nick Macfie