Jet demand is a main ingredient in their bullish 2021 crude-oil recipe
“Despite near-term challenges for jet, we are constructive on 2021 oil prices as the global economy- and especially jet demand- improve as vaccines become available and crude supply continues to surprise to the downside, particularly in non-OPEC.”
Markets Insider, 9/25/2020
Source article (opens in new tab): Goldman Sachs says jet fuel demand will accelerate in 2021, driven by availability of a COVID-19 vaccine by the second-quarter
Article Summary
- Goldman Sachs expects a coronavirus vaccine in 1H2021 will lead to air-travel recovery
- The bank also expects higher prices for both products and crude oil as demand rises, and jet fuel is a contributor to both
- Outside of OPEC, Goldman believes oil-production capacity has been diminished
AEGIS View
Well, it’s difficult to see jet demand getting worse.
Business travel seems to be the major influencer on jet demand growth. We wonder when a vaccine would be available to the general public. First doses are likely to go to medical staff and those most vulnerable, which are mostly those of retirement age.
If Goldman’s point of view is correct, then the more conservative AEGIS outlook of late 2021 price improvements may be pushed forward to mid-2021. Consumers of jet fuel should not split hairs here. The forward curves for both Jet and crude oil are low and are an excellent opportunity to lock-in inexpensive fuel prices.
