Oil Consumption Revived in May... Refining Margins Rebound but Refining Industry Remains Cautious

Increase in Domestic Flights Doubles Jet Fuel Consumption Compared to April
Gasoline and Diesel Use Also Rise by 15.6% and 20.9%, Respectively

[Asia Economy Reporter Hwang Yoon-joo] Petroleum consumption, which had sharply declined due to the spread of the novel coronavirus infection (COVID-19), has rebounded after three months.

According to the Korea National Oil Corporation and the refining industry on the 26th, domestic consumption of aviation fuel among petroleum products in May reached 1.82 million barrels, more than double the 730,000 barrels in April. During the same period, gasoline and diesel consumption also increased by 15.6% and 20.9% respectively from the previous month, reaching 7.8 million barrels and 15.7 million barrels. Aviation fuel consumption also increased by nearly 2 million barrels compared to the previous month. However, it still remains 44.8% lower than the 3.3 million barrels consumed during the same period last year.

The increase in domestic petroleum consumption is analyzed to be due to the stabilization of COVID-19 cases, which has led to increased social activities. According to the Aviation Information Portal System, Korean Air's domestic flights increased from 1,437 in March, when COVID-19 cases peaked, to 2,573 in May. Additionally, low-cost carriers (LCCs), which have difficulty operating international flights, are increasing domestic flights ahead of the summer vacation season. An LCC official said, "Although there was no difference in flight routes since March, the number of flights definitely increased in May due to the golden holiday period."

Supported by this trend, the Singapore complex refining margin turned positive at $0.1 for the first time in 14 weeks. Although petroleum consumption and refining margins have rebounded, the refining industry remains cautious. This is because COVID-19 is resurging worldwide, including in the United States.

An official from the refining industry explained, "If the resurgence in the U.S. leads to social distancing and urban shutdowns (temporary work stoppages) again, petroleum demand will decrease and refining margins could turn negative once more. Since demand recovery in the second half of the year is important, we are closely monitoring the trend of confirmed cases in the U.S."

This content was produced with the assistance of AI translation services.