Omicron’s spread has yet to dampen Asia’s love of oil


The rapid spread of omicron has yet to slow road traffic across much of Asia, although it is causing restrictions in parts of Europe, suggesting that demand for energy in the region could be spared from a major blow.

More cars took to main roads in December amid the year-end festivities than last month. All but one major Asian country saw an increase in mobility for the month, according to data compiled by Bloomberg using Apple Inc.’s mobility statistics through December 27.

The overall positive image of Asia – at least so far – could help support gasoline demand and refining margins, which in turn could help physical consumption of crude and futures contracts. oil through 2022. The global benchmark Brent rose more than 3% in the week to Christmas, and has extended its gains since then, briefly surpassing the $ 80 a barrel level on Wednesday.

Yet the region’s biggest oil consumer, China, has shown signs of weakening demand for fuel. While Apple does not provide data on China, other local suppliers like Baidu Inc. have shown that traffic congestion has eased in Shanghai, while it is on the rise in Beijing. Xi-an, a city of more than 10 million people stranded after an increase in virus cases, saw congestion drop by a fifth on Wednesday compared to the previous week, according to data from Baidu’s mapping service. .

China’s relentless zero-covid approach continues to undermine travel plans, while an increasingly strict line on pollution further hampers demand. The consumption of transportation fuels could face headwinds as the new year approaches. Chinese authorities on Wednesday renewed their commitment to a zero-tolerance approach to the disease as they tackle the largest and most prolonged outbreak since the outbreak of the virus.

Bloomberg

In India, demand could remain more resilient as the government avoided further nationwide restrictions even as some states announced nightly curfews and other restrictions. Driving activity in December was considerably higher, with crowds thronging malls and markets. Diesel sales in the first half of this month were up 18% on the month, while gasoline consumption rose about 7%.

Traffic increased in Australia as well, with driving activity 12 percentage points higher through December 27 than in November. Still, an increase in the number of cases darkens the outlook as it could test the government’s resolve to continue with the reopening. New South Wales recorded 11,201 new cases on Wednesday, nearly double the figure from the previous day, and hospitalizations are at their highest level since mid-October.

While on-road fuels such as diesel and gasoline may so far withstand the omicron surge, demand for jet fuel may not be as resilient as borders close. Asian aviation hub Singapore has frozen ticket sales for flights under its vaccinated travel lanes program, while Indonesia may ban overseas travel. Meanwhile, China’s new aircraft cleaning rules may trigger cancellations. Hong Kong has dealt regional travel a further blow by removing quarantine exemptions for all crews working on passenger flights outside of mainland China.