Analysis: Global mobility flatlines as fears over rising COVID-19 infections escalate

Energy demand indicators in the world's biggest oil-consuming countries suggest the economic recovery from the COVID-19 pandemic is flatlining, and in some cases retreating, amid growing concern over an acceleration in global COVID-19 infections.

With some notable exceptions, the recovery in global mobility indices from April lows largely came to a halt in early July, according to mobility data reported by Google showing activity in offices, retail sites, and transport hubs.

Economic mobility in the US, the world's biggest oil consumer, was stagnant last week after dipping from post-lockdown highs on July 2, according to the data up to July 17.

In Asia, mobility is falling in India and South Korea while the activity rebound in most of Europe's biggest economies may also have run out of steam, the data show.

Transport fuel demand, which has remained lower than year-ago levels in most key demand centers, is showing signs of weakening with driving activity indicators also lower in key economies such as Germany.

Assuming the mobility data is a good proxy for gasoline and diesel demand, the latest figures may temper optimism over a rapid 'V-shaped' demand recovery this year which helped trigger the oil price bounce from April lows.

"Countries that are hit hard, like Brazil and the US, now seem to see the virus' expansion more seriously," Rystad Energy said in a July 20 note.

"If road transport decreases with new lockdowns then road fuels are in serious risk again, and it's road fuels that take the biggest hit from the pandemic."

US cases surge

The spread of the virus may be now getting "dangerously fast" in some places, with the pace of newly confirmed coronavirus cases continuing to expand, S&P Global Platts Analytics said in a July 21 note.

Indeed, the latest figures come less than two weeks after the International Energy Agency warned that a second-wave of COVID-19 infections could still derail the world's recovery and delay the rebound in oil demand.

The US has been hit particularly hard by a rebound in COVID-19 infections. Noting that new cases accelerated "spectacularly" to more than 50,000 in early July from about 20,000 a month earlier, the IEA cut its forecast for US oil demand in Q3. In some US states cases per capita are now similar to New York during the April medical crisis and gasoline demand is slipping in the worst-hit states of Texas, Arizona, California, and Florida.

Platts Analytics estimates global gasoline demand will take until mid-2021 to fully recover to 2019 levels after contracting by 2.57 million b/d this year. Distillate demand excluding jet fuel is seen more resilient, recovering to 2019 levels by year-end.

Overall, global oil demand will shrink by 8.3 million b/d this year to average 94.2 million b/d, before recovering to 101.2 million b/d in 2021, according to Platts Analytics.

Multi-speed recovery pattern

Despite a shallower-than-expected slump in global oil demand during the second quarter as lockdown measures slammed mobility, market watchers have urged caution over the pace of the recovery due to rolling, localized curbs on mobility and activity.

Mining and resource giant BHP recently said it expects the pace of the oil demand recovery to vary widely across different countries due to second-wave outbreaks.

In the Americas, mobility has flatlined in Canada and Brazil while Mexico is bucking the trend with a continued gradual recovery in economic indicators, the Google data show.

In China, road congestion in Beijing is rising but still stood at 45% below year-ago levels last week, the lowest since early June, according to TomTom.

In Europe, road congestion levels in Berlin, the capital of Europe's biggest economy, shrank on year-ago levels for the third straight week last week, according to the data.

But mobility in the UK, which has lagged its regional peers in recovering from lockdowns, has yet to suffer. In Russia, which saw its economic mobility surge from low winter levels in April, continues to see delayed lockdowns shrink mobility levels, according to Google data.