US sees 2022 recovery in jet fuel demand

US jet fuel and diesel demand will approach pre-coronavirus levels in 2022 but gasoline will continue to lag under the first forecast for next year by the Energy Information Administration (EIA).

The administration forecast 2022 full-year jet fuel demand just 1.7pc lower than 2019, at 1.71mn b/d, in the latest EIA Short-Term Energy Outlook. That would represent a 21pc increase from the 1.41mn b/d forecast for this year, which the administration revised lower from the December outlook.

US gasoline demand would average 8.98mn b/d, higher by 3.3pc than the 8.69mn b/d estimated for 2021. National gasoline consumption averaged 9.31mn b/d in 2019.

US diesel demand would increase by 3.3pc to 4.12mn b/d in 2022, from the outlook's 2021 estimate of 3.99mn b/d.

Transportation fuel consumption plunged in early 2020 as governments responded to the spread of the coronavirus Covid-19 pandemic. The collapse in global jet fuel demand has limited US refinery crude processing as facilities struggle to meet reduced transportation demand without overwhelming stockpiles of jet or other fuels. Jet fuel — a high-sulphur, carefully regulated distillate — previously accounted for roughly 10pc of a US refiner's yield from crude processing. Reduced air travel has made managing diesel production especially tricky.

EIA reduced its outlook from December forecasts in every quarter of this year. Second quarter consumption fell the furthest, by 10pc to 1.39mn b/d compared to last month's forecast.

Global crude and liquid fuels consumption would increase from 2020 by 6pc to 97.77mn b/d in 2021, still trailing the 101.18mn b/d recorded in 2019. That outlook was 0.4pc lower than the December forecast. Consumption would climb again in 2022, to 101.08mn b/d, as non-OECD consumption outpaced the recovery in OECD countries.

The EIA forecast total US gasoline stockpiles falling this year by 3pc to 233.9mn bl before rising to 249mn bl in 2022. Diesel inventories would fall from 2020 levels by 8.4pc to 145mn bl, a slightly smaller reduction compared to the December outlook.

By Elliott Blackburn