LONDON/NEW YORK  – Renewed lockdown restrictions in Europe and slower than expected vaccine rollouts are likely to check a global recovery in fuel demand and make OPEC+ oil producers take a cautious stance when the group reassesses output policy this week.

Europe's lockdowns restrain global fuel demand recovery- oil and gas 360

Source: Reuters

With its extensive vaccination programme, Europe was central to forecasts for demand recovery, especially as many Europeans were hoping for a return to normality by the summer and holidays abroad. That now seems unlikely.

Germany, Europe’s biggest oil consumer, has extended its lockdown until April 18 to contain a third COVID-19 wave.

A third of French people have entered a month-long lockdown, and most of Italy, including its capital Rome and its financial centre Milan, have curbs on business and movements.

Lockdowns in Austria, Norway and Switzerland have also been tightened.

When the Organization of the Petroleum Exporting Countries and other oil producing nations, a group known as OPEC+, meet on Thursday, it will be difficult for them to ignore the new lockdowns that most analysts had ruled out for the medium term because of their economic cost.

With oil prices making steady gains earlier this year, OPEC+ had hoped to ease output cuts, but industry sources say those plans in jeopardy.

The renewed lockdowns and problems with vaccination could prevent the recovery of up to 1 million barrels per day (bpd) of oil demand in 2021, Rystad Energy said.

The Oxford Stringency Index, which measures the strictness of the response to COVID-19, shows that despite vaccine rollouts, the situation in Europe has become more restricted.

In October, only three European countries were under moderate lockdowns, but in March, most of the continent has come under severe restrictions.

Traffic in most European countries almost recovered to pre-pandemic levels in October, before falling sharply again in January, Apple mobility data showed. Traffic levels in March remained below a baseline volume assessed on Jan. 13, 2020.

With the new lockdowns, traffic in Berlin, Paris and Rome fell sharply last week, data provided to Reuters by location technology company TomTom showed.

Public transport use in Paris was down by 51% last week and is expected to drop further, Israeli public transit app developer Moovit said.

The firm also recorded a sharp fall in the use of public transport in Italy, and a slight decline in Germany’s major cities since the new lockdowns were imposed.

In London, however, traffic and passenger levels were slowly recovering as a stay-at-home order ended on Monday.


European cars are mainly run on diesel and the region is a huge diesel importer. However, the arrival of U.S. diesel and gasoil into Europe dropped to zero last week in response to weak demand, Refinitiv data showed.

March arrivals are expected to be at a record low of 38,000 tons aboard a single tanker, Refinitiv said, 85% lower month-on-month and 95% lower year-on-year. April arrivals were also expected to remain subdued.

Gasoil stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub rose by 4% in the week to Thursday, data from Dutch consultancy Insights Global showed, amid weak demand, particularly in Germany. [ARA/]

A possible halt in summer holidays will only worsen the situation, as without the expected recovery in air travel, refiners will have to divert more jet fuel to the diesel pools.

Energy Aspects forecasts European demand to be lower by 800,000 bpd year-on-year in March, but expects the demand to continue recovering, rising by 2.7 million bpd in third quarter versus first quarter 2021.

Globally, Energy Aspects expects August demand to be 8.2 million bpd higher versus March, as summer discretionary driving peaks.


In the United States, the situation has been more stable. The U.S. vaccine rollout has outpaced Europe’s, and additional widespread lockdown measures have not been imposed.

The United States is the world’s biggest gasoline consumer, and gasoline demand has mostly been rising week on week, Energy Information Administration data shows.

Demand increased in the week to March 19 to 8.6 million bpd, the highest since November except for the first week of March, when demand hit 8.7 million bpd.

Traders are waiting for demand this year to hit a sweet spot of 9 million bpd, which will indicate stronger levels of consumption, said John Kilduff, partner at Again Capital LLC in New York.

The upcoming Passover and Easter holidays could provide an early indication of whether the U.S. market will have a robust driving season in the summer, the country’s peak gasoline season, he said.

Traffic patterns in major U.S. cities New York and San Francisco showed more normal congestion levels compared to last year.

The average congestion level in New York from March 17 through March 23 was 225% higher than the same time in 2020 and about 13% lower than 2019, data from TomTom showed.

In San Francisco, average congestion over the last week was 36% below 2019 levels, but 270% higher than last year.

Gasoline demand in Asia was also stable and there are no renewed widespread lockdowns.

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