Oil consumption has recovered at a record pace but a report from IHS Markit said it is nearly at its limit. And don’t expect it to recover to the peak seen in February anytime soon.
The energy information and consulting firm said the rally, which pushed up demand by13 million B/D to 89 million B/D, is likely to continue to around 92–95 million B/D, well short of its 100 million B/D peak early this year.
“For demand to fully return, travel—especially air travel and commuting to work—needs to get back to normal. And that won’t happen until there is containment of the virus and effective vaccines,” said Jim Burkhard, vice president and head of oil markets for IHS Markit.
Prices will depend on how disciplined producers are. Since the March price crash, “OPEC+ members have rediscovered production restraint and US output is expected to be lower as well,” Burkhard said.
US gasoline sales plateaued in July at 17–18% below levels seen earlier in the year. The summer travel season, such as it was during the pandemic, has passed and commuting remains limited due to the many people still working from home or who are unemployed.
Jet fuel sales are looking much better than they were in April—the number of scheduled flights is now down 30% compared to 78% at its worst. Jet fuel consumption, though, is still half of what it was a year ago because travelers are not flying internationally—those flights generate the most demand, the report said.
Future demand will depend on controlling COVID-19. Whether it will have a lasting impact on demand remains to be seen.
A recent survey by KPMG suggests the changes in business practices may affect demand even post-COVID. Based on a recent survey of 100 top executives, 69% said their companies would be downsizing their office space.
The mass move to working at home began as a way to limit the risk of spreading the virus, but the survey shows companies have found it can also help them recruit and retain top workers. Seventy-three percent of the executives said, “working remotely has widened our potential talent pool.”
“Companies worldwide enabled remote workforces nearly overnight, and what started as an extraordinary pilot is now considered permanent in many organizations’ operating models,” said Joe Parente, KPMG’s consulting leader.
To support that change, 77% of these companies plan to build on their use of digital collaboration.
In-person collaboration is not likely to fade away, but for those whose work requires spending long periods interacting with a computer, there may be fewer trips to the office ahead.
peakyeast on Sat, 29th Aug 2020 5:10 pm
This virus is having a very convenient timing with reference to peak oil and in particular peak shale as predicted by IEA.
And the lockdown of luxuries and most wasteful industries – instead of what normally happens is also very convenient.
I have a feeling that we are going to look back upon 2020 as the first visible step down the consumption ladder.
makati1 on Sat, 29th Aug 2020 5:26 pm
Peaky, we are watching the Great Reset/Great Leveling in action. The greedy elite decided last year that they are getting old and they want to take it all … NOW.
If you think this flu thingy is an accident, or even serious, I have a slightly used bridge in Brooklyn for sale cheap. LOL
JuanP on Sat, 29th Aug 2020 5:40 pm
“If you think this flu thingy is an accident, or even serious, I have a slightly used bridge in Brooklyn for sale cheap. LOL”
Mak, you are hilarious!
Anonymouse on Sat, 29th Aug 2020 5:58 pm
Farticle says….
For demand to fully return, travel—especially air travel and commuting to work—needs to get back to normal…….
But isnt ‘travel’ especially air travel, and certainly ‘commuting’, one the prime drivers (ahem), of resource depletion and pollution? I thought that was a problem in need of fixing among many others.
But, yea, lets get things back to ‘normal’, ASAP, so we can get back to the important work of making the planet as unpleasant as economically possible to live on. And of course, ensure we keep depleting what oil still remains for the worst of reasons.
Remember when the cancer-monkeys used to talk about ‘Peak Demand’, so they could sidestep and avoid discussing the concept of Peak Oil entirely? They threw out notions, like ‘EV’s or stupid robot cars, would cause ‘Peak Demand’ in oil consumption.
Well, now the narrative has shifted, yet again, and now, no is talking ‘Peak Demand’ because everyone is, or will be, driving a Tesla to get to Wall-Mart, but, now, its the so-called ‘Corona not-a-virus’ that is the big problem for oil, not ‘EV’s or robo-cars.
Since no one could afford the trillions needed for EVs (or robo-cars ROLFMAO) that wouldnt do a thing to reduce oil consumption, they found something far better. A pretend pandemic that also happens to drastically reduces oil consumption without having to invest all sorts of money and resources we done have on a set of ‘fixes’ that would actually increase oil demand and resource useage. LoL.
And as a bonus, permanent police-state controls, lock-down and face-diapers, with soon-to-be announced forced vaccinations, especially for the non-compliant….
Plus trillions in bailouts for the already wealthy and powerful. Nothing much for you though. Cant forget that.
makati1 on Sat, 29th Aug 2020 6:00 pm
Thanks JuanP. I’m glad you can still laugh, but reality is that bitch and denying it is only adding to the pain. You need to get out of the box and look at the real world. Or join the lemmings going over the cliff?