High Jet Fuel Demand Spikes Crude Oil Prices

By Adedapo Adesanya

Crude oil prices rallied by more than 3 per cent on Thursday as data showed that there is a steady demand for jet fuel as commercial flights show improved numbers after being hit by the coronavirus pandemic.

As a result of this, the price of the Brent jumped by 3.38 per cent or $2.12 to $64.86 per barrel, while the West Texas Intermediate (WTI) moved up by $2.29 or 3.87 per cent to $61.45 per barrel.

According to reports, the number of commercial flights looks to have hit a post-pandemic high in the past days and this may have been caused by the desire of people to travel for the Easter holidays.

This was better than the previous high from Christmas travels and the market interpreted this as a good sign for jet fuel demand going forward.

According to global flight tracking service, Flightradar24, cited by Bloomberg, the 7-day rolling average of the number of flights tracked hit the highest on Wednesday since the start of the pandemic.

Flightradar24 tracked a total of 77,708 flights—both passenger and freight—a number which exceeded the previous peak during the Christmas holidays since COVID-19 started spreading.

The higher numbers of flights were recorded in the major markets of the United States and China as they both make up a large percentage of the global population.

This occurred as the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) was still deliberating the next step towards output cuts for the month of May at its meeting.

The OPEC+ alliance is reportedly debating raising its oil output by 350,000 barrels per day in each of May and June and by 400,000 barrels per day in July.

There had been indications of a rollover of the current cuts or just a slight increase in view of the recent weakness in oil demand with European lockdowns but that remains to be seen at press time.

There have been speculations that there would be an increase in the group’s production over the next three months.

Saudi Arabia was also reportedly submitting a plan to ease its extra unilateral cut of 1 million barrels per day over the course of the summer. According to OPEC+ sources, the Kingdom will loosen its additional voluntary one million barrels per day cut by 250,000 barrels per day in May, 350,000 barrels per day in June, and 400,000 barrels per day in July.