Europe’s driving rebound holds course but yet to catch year-ago levels

Highlights

Mobility data suggests fuel demand above pre-crisis level

Seasonally adjusted demand remains weaker

Jet demand still struggling from air traffic collapse

London —
European driving activity continues to rebound from lockdown lows of April but road fuel demand may yet to have reached seasonal year-ago levels, according to the latest demand and mobility data.

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Road traffic in Europe’s five biggest economies now stands firmly above pre-pandemic levels, according to Apple mobility data, as regional governments continue to reopen their economies and travel restrictions ease.

Average driving activity in Germany, the UK, France, Italy and Spain was 33% above January 13 levels based on direction routing requests in the week to July 8, according to the data.

But the data does not take into account seasonal driving activity, which rises as warmer weather and longer days bring more drivers onto the roads.

Even measured against driving activity in the second half of February well before European lockdown measures kicked in, current driving levels are about 18% higher, the Apple data shows.

Compared with year-ago levels, the recovery gap slims further and may even be lower than seasonal norms.

Although mobility levels are back to pre-coronavirus levels in Italy and France, this still implies “a more than 20%” decline in gasoline demand compared with seasonal norms, the International Energy Agency said July 10.

Germany, Europe’s biggest fuel market, is currently the only country in the region that shows signs of road fuel demand recovering to seasonal levels, the IEA said.

Seasonal norms

In the UK, which has seen driving recovery lag its European peers, road fuel sales per filling station continue to trend upwards but likely remain well below year-ago levels.

Average sales last week were at 77% of a typical week before lockdown at 13,667 liters per fuel station, according to the latest official UK data released July 9.

Although no comparative year-ago data was given, historical figures show the UK’s road fuel and jet demand climbs by about 7% in July against the average for the first two months of the year.

That same demand picture is likely mirrored across the wider region.

Despite a strong bounce back from April lows, investment bank Jefferies estimates that overall economic activity in Europe is still only 62% of pre-coronavirus levels.

While energy consumption has moved up to 92% of normal levels, other activity indicators are picking up more slowly, with traffic congestion at 81% of pre-coronavirus levels and public transportation at 61%. Hiring trends stand at 61% while flight activity still remains at just 17% of norms, according to Jefferies.

Jet fuel lag

Indeed, including jet fuel demand, Europe’s overall transport fuel demand is still much lower than the level of a year ago.

With international travel curbs still hampering business trips and tourism, air travel and its consequent jet fuel demand remains the biggest casualty of the pandemic in terms of percentage drop.

In the UK, demand for kerosene and jet continued to slide in May, falling 4% month on month to 515,000 mt. In April, the UK’s jet fuel demand stood at just 111,000 mt, about a tenth of year-ago levels.

The IEA expects oil demand in the region in the second quarter to fall 3.2 million b/d year on year and in the third quarter by 1.3 million b/d year on year. By the fourth quarter, most fuels will have risen above 2019 levels except for jet fuel, the IEA believes.

S&P Global Platts Analytics forecasts that European oil demand will shrink by 1.6 million b/d on average in 2020.