Thai Oil predicts surge in jet fuel demand despite slow economy

Despite forecasted sluggish economic growth, Thai Oil Plc, Thailand’s leading oil refinery in terms of capacity, envisages an upturn in demand for refined oil, particularly jet fuel, in the current year.

Jet fuel consumption is predicted to surge by 24.2%, equating to an average of 16.8 million litres per day (MLD). This represents a considerable increase from the previous year’s figure of 13.5 MLD, highlighted Pornpiman Srisatabusaya, petroleum value chain analytic manager at Thai Oil.

This anticipated rise is largely attributed to an influx of foreign tourists in 2024, with figures projected to hit the 35 million mark, a 25% increase from last year, according to the Tourism Authority of Thailand. To put this into perspective, foreign visitor numbers totalled 40 million in 2019.

In addition to jet fuel, demand for diesel is also expected to marginally increase by 0.4%, reaching an average of 69.1 MLD, up from 68.9 MLD. Similarly, gasoline demand is set to grow by 3.7% to 32.6 MLD from the previous year’s 31.5 MLD, as projected by Thai Oil.

Notably, diesel, gasoline, and gasohol (a blend of gasoline and ethanol) are currently subjected to the state price subsidy programme, reported Bangkok Post.

However, consumption of fuel oil, used predominantly for power generation, is foreseen to dip by 1.7% to 5.3 MLD, from 5.4 MLD last year, owing to reduced demand from power plants. This decrease can be traced back to numerous gas-fired power plants opting for fuel oil as a replacement for expensive imported liquefied natural gas (LNG) in an attempt to rein in power generation costs.

Fuel demand

Looking ahead, LNG prices are predicted to decline in 2024, leading power plant operators to curtail their usage of fuel oil.

In the international arena, oil producers and traders are expected to maintain a balance between crude oil demand and supply, despite a reduction in oil supply in the first quarter, as per Pornpiman.

Non-Opec countries, including Canada, the US, Brazil, and Guyana, are set to contribute to additional oil production.

On the consumption front, China’s oil usage is anticipated to decrease, largely due to turbulence in its real estate sector, impacting oil demand. In contrast, oil demand in the US is expected to show steady growth, as the Federal Reserve indicated potential interest rate cuts this year.

As for the EU, oil demand could experience modest growth or remain steady, amidst concerns regarding an economic recession.

Finally, the International Energy Agency reports that global demand for crude oil is expected to escalate by 1.4 million barrels per day in 2024.