The last puzzle piece needed for a complete recovery in oil demand is falling into place with air travel consumption showing the first signs of sustained growth since the pandemic. 

Implied jet yield at U.S. refineries, or the percentage of crude oil turned into jet fuel, has risen consistently since mid-November and is holding at 9% or higher, data from the U.S. Energy Information Administration show. Typically, about 10% or 11% of crude is used to make jet fuel.  

Jet fuel has been the biggest laggard in the oil market’s recovery. For much of the pandemic, refiners were forced to limit how much crude they processed to avoid making jet fuel at a loss even as gasoline and diesel demand returned. Thanks to the steady return of air travel that trend is slowly reversing.  

An average of 1.88 million passengers per day took to the air in the first 21 days of this month, more than double compared with the same period last year, according to the Transportation Security Administration. This is a continuation from strong November numbers, which also more than doubled from the year before.

AAA predicts 6.4 million passengers will travel by plane from Dec. 23 to Jan. 2, up from 2.3 million in 2020. 

Raising jet fuel yields also allows U.S. refiners to get out of costly renewable credits applicable to diesel production under the federal Renewable Fuel Standard (RFS) program. Diesel and gasoline producers and importers must pay for credits if they’re unable to blend the required amount of biofuels. Credit prices have come off historic highs this summer but remain elevated compared with prior year levels. 

Even with air travel increasing, the four-week average of U.S. jet fuel demand, at 1.5 million barrels per day last week, is about 16% below the same time in 2019, EIA data show.