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After an optimistic start to the summer that sent jet fuel demand soaring, analysts now caution that global jet fuel demand is set for a slowdown 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 putting the brakes on fuel demand growth, which typically accounts for around 7% of global oil demand, as reported by Reuters.
Based on Goldman Sachs data, as reported by Reuters, global jet fuel demand through July this year averaged around 7.49 million barrels per day, up a significant 500,000-bpd increase over the same period in 2023.
However, while Goldman Sachs has forecast 2024 jet fuel demand growth at 600,000 bpd, a consumer spending slowdown may put the brakes on that, with airlines warning this week and last that they fear a drop in spending on leisure travel.
This week’s sentiment on jet fuel has changed dramatically from earlier this summer, when Chinese refiners, in particular, began celebrating improved margins, with total China air traffic rising by 14% in June compared with the same period in 2019, right before the COVID-19 pandemic, Bloomberg reported last week.
In June, total passenger numbers on global airlines were set to hit a record high of 4.96 billion, according to the International Air Transport Association (IATA). At the time, IATA Director General Willie Walsh stated: “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, said to be holding off on bookings due to uncertain economic outlook, Reuters reported.
“They have less available, less disposable income and (less) capacity to do anything including travel,” Reuters quoted Hilton Worldwide CEO Christopher Nassetta as saying during an earnings call last week, indicating the consumer spending boom on travel post-COVID is coming to an end.
Ryanair cut its forecast last week, warning investors about “materially lower” summer travel fares. The airline saw its first-quarter profit fall by nearly 50%.
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The post Jet Fuel Demand Recovery Grinds to a Halt appeared first on Energy News Beat.
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