Petrol demand increasing, but jet fuel slump ‘ongoing’, says Viva Energy
Petrol sales are picking up, but fell 34pc in April from a year earlier across its 1290 Coles Express service stations.
Fuel retailer Viva Energy has indicated a pick-up in demand for petrol as Covid-19 restrictions are eased, but expects a jet fuel slump to linger with planes grounded and consumers’ travel habits changed.
Petrol sales fell 34 per cent in April from a year earlier across its 1290 Coles Express service stations, but Viva said volumes had picked up in early part of May as lockdown measures moderated.
“It’s pretty early days but there are some encouraging signs that volumes are starting to improve as we see more traffic on the roads,” Viva Energy chief executive Scott Wyatt told the Macquarie Australia conference.
“But I think we have a long way to go on that and it really depends on what the government does over the next few weeks to relax measures and whether we can therefore expect to see further improvement.”
Jet fuel sold to airlines plummeted 75 per cent in April from a year ago.
While slightly better than its forecast for an 80-90 per cent slide, Viva said it was uncertain whether the aviation sector would return to pre-pandemic levels as customers’ habits change. It noted Qantas had cancelled domestic flights until the end of June and international through the end of July.
“What we’re expecting is domestic will come back first and obviously won’t necessarily come back to where it was because obviously there will be some restrictions still in place and people will have adjusted their travel habits. And then international is no doubt going to be sometime down the track,” Mr Wyatt said.
“I think it’s a more gradual recovery in aviation compared to the retail business through the course of this year but we have to wait and see how the government manages that.”
Viva has cut petrol production from its Geelong refinery by half, reflecting falls in demand, with part of the facility shut down.
“The shutdown of units will reduce our gasoline production by half and that’s a good thing for Geelong,” Mr Wyatt said.
Petrol margins are severely under pressure and have been negative for some time so reducing exposure to petrol production is the right thing to do from a margin perspective even though it reduces crude intake.”
Caltex said on Thursday its retail fuel volumes fell 16 per cent for the four months to April and reiterated expectations for an 80-90 per cent plunge in jet fuel.
Its retail store hours have been cut by 15-20 per cent while its board and executive team have taken a 20 per cent pay cut for three months with its senior leaders a 10 per cent reduction.
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