(Bloomberg) -- For a sign of where oil prices are heading, look to the skies — specifically, China’s skies. 

Air travel in the world’s second-largest economy holds the key to global energy demand this year, Vikas Dwivedi, global energy strategist at Macquarie Group, said in an interview. While gasoline consumption is far better than expected and diesel demand has recovered, jet fuel is lagging, he said. That’s a bad omen for bets on $100 oil. 

So far, revenge travel — the phenomenon of millions in America and Europe packing their bags to make up for time spent cooped up during lockdowns — hasn’t repeated in China, adding little incentive for the world’s largest oil importer to go on a furious buying spree. The post-Covid return has been slower compared to other countries amid inflation and concerns about the economy. 

Two months after Beijing scrapped its stringent Covid Zero policy, flying has yet to fully recover. While the volume of international flights is higher than at the height of the Covid restrictions last year, it was still only 22% of pre-pandemic levels as of March 16, according to air traffic data tracker VariFlight. 

Watch: Slower Pace of Recovery for China’s Big 3 Airlines: Jain (Video)

An increase in jet fuel demand by 200,000 barrels a day in China could spark a surge in global demand of half a million barrels a day as Chinese travelers visit multiple cities overseas, Dwivedi said. 

“The difference between being a bull or a bear lies in Chinese demand this year,” he said. “You may argue it’s too early to tell, but by mid-May we’ll get a clearer picture.”

Read more: Packed Planes Are Eroding Jet Fuel Demand in Bearish Oil Signal



--With assistance from Chunzi Xu.

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