NEW YORK: Global jet fuel demand is poised to soften as a slowdown in consumer spending hits travel budgets, a shift that could weigh on oil prices in the months ahead.

Global oil demand has not met expectations in the first half of 2024 due to weaker-than-forecast consumption in the US and China, the top two oil markets.

Jet fuel makes up about 7% of global oil demand and was widely expected to be a pillar of growth this year as travel continued to rebound from the pandemic.

Global jet fuel demand averaged about 7.49 million barrels-per-day (bpd) this year through July, a nearly 500,000-bpd increase over the same period last year, according to Goldman Sachs data.

Demand will need to rise faster in the months ahead to meet the bank’s growth forecast of 600,000 bpd for the year. That looks less likely, with Goldman Sachs estimates signaling demand growth from August through October at only around 400,000 bpd.

Major US airline operators and travel companies in recent days echoed worries that consumer spending is slowing as disposable incomes have shrunk, which should weigh on leisure travel.

US consumer spending growth averaged just 0.3% in the three months through June, the slowest increase in over a year.

“We see limited scope for further gains for (US) jet fuel, traditionally the most macro-driven product category, as a cooling economy weighs on demand for air travel,” the International Energy Agency (IEA) said on Tuesday.

Jet fuel demand in the US dropped sharply from a post-pandemic high of 1.95 million bpd in the week ended Aug. 2, to just 1.6 million bpd last week, the EIA reported on Wednesday.

Weaker economic activity could also worsen a slowdown in global trade, which would cut air freight demand, Bank of America analysts said. They noted that global trade has been experiencing a slowdown over the past few years as demand in the US and Europe has shifted to services from goods.