If one investment expert’s prediction is correct, we won’t see as many jetliners flying in and out of Oklahoma City’s Will Rogers World Airport nor the Tulsa International Airport for sometime to come. If anything, instead of national travel, business leaders will be resorting to the fast-growing Zoom video-conferencing tool.
It’s the prediction and analytical observation of Jeff Currie, Goldman Sachs’ global head of commodities research.
“I think you’re going to lose a good chunk of the jet demand that would have been associated with business travel. Our base case is you lose somewhere around 2 to 3 million barrels per day,” he said.
It’s already been in extensive use for the past few months as the nation found itself locked down due to the coronavirus pandemic. It even has resulted in Zoom bombings or hack attacks as witnesses by more than one group attempting to meet by video-conferencing.
Global oil demand is expected to fall by 9.3 million barrels per day in 2020, according to the International Energy Agency.
Demand for oil has been hurt significantly by the pandemic as countries impose lockdowns to control its spread, and countries have cut supplies. In April, futures for West Texas Intermediate crude traded below zero for the first time ever.
For everything but business travel, Currie expects a strong recovery in demand, but the oil supply could take a little longer to get back online according to Market Watch.
“We believe demand will exhibit a V-shaped recovery, but supply will exhibit an L-shaped recovery,” he said, as wells need to come back online, and companies need to increase spending. This could mean demand rises above supply as early as June 1, he said.
But while demand returns to normal, it will be from a base with less business travel. “Before we used to have these internal meetings and things of that nature, and I think this is going to be way more Zoom-oriented, other types of substitutes,” he said.
“Look at the routes that the airlines are planning when they come back, they’re not going to be at the same level that they were previously.”
Airline stocks have plunged since the beginning of the crisis as almost all air traffic has come to a halt. In April British Airways owner IAG warned that the “recovery of passenger demand to 2019 levels will take several years.”
Source: MarketWatch