Surges in coronavirus infections are slowing a recovery in fuel use from the doldrums of lockdowns in the United States and other countries, raising concern it could be years before consumption rebounds from the impact of the pandemic.
Global fuel demand fell by around a quarter at the peak of the lockdowns, when over 4 billion people worldwide were asked to stay at home. The unprecedented decline in demand forced producers to make record output cuts and pump hundreds of millions of barrels of oil into storage.
Fuel consumption and oil prices had recovered some ground as governments relaxed restrictions on population movements and the output cuts stemmed the glut.
That recovery is stalling, however, as infections swing upward in top fuel consumer the United States, as well as in other major economies such as Brazil and India.
In the week ended July 11, U.S. retail gasoline demand fell 5% from the previous week, according to GasBuddy, which tracks real-time retail gasoline purchases, after several states reimposed restrictions to control outbreaks of COVID-19. Demand also fell the week before, the first time since lockdowns began in March that it dropped for two straight weeks.
“Normally this two-week period would have been the peak demand period and we didn’t get it,” said John Kilduff, partner at Again Capital in New York. “The recovery has been unwinding.”
The surge in U.S. virus cases is happening in some of the most populous states including California, Texas and Florida, which account for more than one-quarter of U.S. gasoline consumption.
U.S. gasoline demand pre-pandemic was around 9 million barrels per day (bpd), or around 9% of global oil supply, according to U.S. government data.
Driving in major U.S. cities with rising infection rates dropped in July, including in Los Angeles, Phoenix, and Miami, according to Dutch location technology company TomTom.
Traffic in Houston, Texas, had recovered in early June, but it has now dropped to where it was at the depth of the lockdown in April, TomTom showed.
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