Global mobility hits post-COVID high as markets brace for omicron impact

Activity levels in most of the world's biggest oil consuming countries have improved to post-pandemic highs, even as markets continue to second-guess the impact of new restrictions to contain the spread of the omicron variant of COVID-19.

Mobility in countries representing about half of global oil demand averaged 6.3% below pre-COVID levels in the week to Dec. 5, according to adjusted data from Google, the highest since the pandemic devastated global oil demand in early 2020.

The data -- which tracks mobile phone activity and has proved a good proxy for oil demand -- shows Brazil, India and Mexico saw strong gains in activity levels over the week, further exceeding pre-COVID levels already reached in early November.

US mobility returned to around 14% of pre-COVID levels after dropping sharply during the Thanksgiving holidays, while in Europe, the data shows lower mobility in Germany was more than offset by higher activity in Spain, France and the UK.

New COVID-19 cases plateaued in the week to Dec. 5, according to the World Health Organization, which notes that the omicron variant has spread to 57 countries, although it remains too early to tell if the variant is more infectious that previous variants.

Despite reports that omicron infection symptoms may not be as severe as first feared, a number of countries are reintroducing restrictions and the UK has said the variant is a concern as it is "growing much faster" than the currently dominant delta strain of the virus.

In Europe, Germany has already announced tougher restrictions on unvaccinated people and the UK is asking people to work from home, supporting concerns over at least transitory implications for oil demand.

"Oil demand is thus unlikely to escape completely unscathed, though the effects will probably not be nearly as serious as initially feared," Commerzbank said in a Dec. 9 note.

Aviation demand dips

In China, which is not covered by Google data, the markets remain focused on whether localized COVID-19 outbreaks are slowing industrial activities and the near-term demand outlook.

"Oil demand in Q4 could see a slight drop compared to last year, as virus risk dragged down people's willingness in traveling, and bearish performance among traditional industrial sectors could provide little help for industrial related fuels," S&P Global Platts said in a recent note.

Global weekly scheduled airline capacity edged 0.5% lower on the week to 78.39 million seats for the week starting Dec. 6, as increases in Southeast Asia, Latin America and the Southwest Pacific offset a fall in North America and North Africa, according to aviation data company OAG.

China's capacity slipped 1% to 85.8%, India's capacity edged 0.8% higher to 88.2%, Mexico's capacity rose 1.5% to 100%, the UK's capacity increased 2.7% to 63.3% and France's capacity gained 1.1% to 72.5%.

After cutting its forecasts for global oil demand in 2021 and 2022 due to weaker activity data at the end of October, Platts Analytics sees gasoline and gasoil/diesel demand returning to December 2019 levels by the end of 2022 while jet demand will remain at 8% lower due to lower airline travel.

For 2022, Platts Analytics projects global oil demand to grow by 4.7 million b/d and reach 103.2 million b/d, which on an annual average basis will be 700,000 b/d above pre-pandemic levels.