Fuel demand rises as schools open, commuters shun public transport

By Bozorgmehr Sharafedin

LONDON (Reuters) - Traffic picked up in cities across the globe as the summer season ended and schools opened, giving a boost to fuel demand, but the prospect of recovery remained weak as many commuters still worked from home and vehicle sales were down.

The reliance on isolated forms of travel including private cars seemed to be the main factor boosting demand, analysts and traders said, as most people avoided public transport for fear of the coronavirus.

Road traffic in New York, London and Paris was on a slow but steady recovery, data provided to Reuters by location technology company TomTom showed.

In Moscow and Beijing, traffic was as high as pre-lockdowns levels. (Graphic: Road traffic in capital cities Road traffic in capital cities, https://graphics.reuters.com/OIL-GLOBAL/qzjvqyrlmvx/chart.png)

Fuel demand usually falls in September as the summer driving season ends, but this year, analysts expect fuel demand in September to be almost on par with August.

"Over the first 10 days of September road fuels demand has added 700,000 barrels per day (bpd) after remaining flat over the summer months. The acceleration is mostly visible in Europe," said Artyom Tchen, senior oil market analyst at Rystad Energy.

Traffic in some small European cities such as Geneva has even exceeded 2019 levels, TomTom data showed.

Data provided to Reuters by the app Transit showed public transport in many cities making a much slower recovery in September compared to road traffic.

People in the United Kingdom avoided public transport far more than French, data from Transit showed, while use of public transport in the United States remained low. (Graphic: How COVID-19 is disrupting public transport How COVID-19 is disrupting public transport, https://graphics.reuters.com/OIL-GLOBAL/xlbpglkxlvq/chart.png)

However, analysts and traders said they did not expect a significant rise in fuel consumption in the coming months, since short trips in cities do not burn as much fuel as long holiday journeys.

The fast recovery was also capped by a rise in COVID-19 cases in several countries.

"Many commuters still working from home, new vehicle sales are still sluggish. So I believe this September visible recovery will be relatively short-lived," Tchen said.

A gasoline trader in Geneva said the uptick in fuel demand led by the end of summer vacations, opening of schools and the use of personal cars seemed to be offset by other factors such as working from home.

"Demand will slightly pick up from September onward, but short-lived into Q4, Q1 and Q2," said the trader, who asked not to be identified. (Graphic: Road traffic in capital cities Road traffic in capital cities, https://graphics.reuters.com/OIL-GLOBAL/yzdvxxmemvx/chart.png)

The International Energy Agency (IEA) in its monthly report on Tuesday lowered its global gasoline demand view for the fourth quarter of 2020 by 450,000 bpd and for diesel by 260,000 bpd, largely because of the impact of people working from home.

The change in the number of people who work from home is now a significant component in assessing the level of oil demand.

IEA said work mobility in June was down around 20-50% from January levels, depending on the country, and in July-August it fell even more in the northern hemisphere due to summer holidays.

"In addition, there is the potential that a second wave of the virus (already visible in Europe) could cut mobility once again, albeit likely less than in March-May when many governments took lockdown measures," the IEA said.

(Reporting by Bozorgmehr Sharafedin; editing by Jason Neely)