India’s fuel demand in June continued its recovery from a 13-year low hit in April as more commuters preferred private vehicles over public transport for fear of contracting COVID-19 and economic activity gradually picked up on easing of lockdown restrictions.
Petroleum product consumption rose 11 percent to 16.28 million tonnes in June over demand witnessed in the previous month, according to data from the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Petroleum and Natural Gas.
The demand was, however, 7.8 percent lower than 17.67 million tonnes in consumption in June 2019.
Fuel demand had plunged to 9.93 million tonnes in April, its lowest level since 2007 after stringent coronavirus lockdown halted economic activity and took most vehicles off-road.
Overall, fuel demand had reached over 92 percent of pre-COVID levels.
Demand for diesel, the most consumed fuel in the country, reached 84.5 percent of normal levels, while petrol consumption was at 86.4 percent of normal levels.
Diesel consumption stood at 6.3 million tonnes in June, 14.5 percent higher than May, but 15.4 percent lower than the demand witnessed in June 2019.
Demand for diesel in June was almost double of 3.25 million tonnes consumption in April.
Petrol sales at 2.28 million tonnes were almost 29 percent higher than May, but 13.5 percent lower than in June 2019. It more than doubled from 9,73,000 tonnes in April, the data showed.
Officials said petrol and diesel demand has rapidly climbed due to higher use of private vehicles as commuters avoided public transport.
Cooking gas LPG sales continued to rise on the back of free refills offered by the government to deal with COVID distress. LPG sales were up 15.7 percent at 2.07 million tonnes.
With very few flights in the air, aviation turbine fuel (ATF) demand fell 65.8 percent year-on-year to 2,22,000 tonnes.
The demand for industrial fuels continued to rise with the gradual resumption of economic activity. Naphtha sales were up 18.2 percent year-on-year at 1.16 million tonnes, while fuel oil consumption rose 6.3 percent at 6,99,000 tonnes.
Sale of bitumen, used for road construction, was up 27.5 percent to 5,06,000 tonnes and petroleum coke usage was up 7.8 percent at 1.6 million tonnes.
“India’s oil demand for June’20 only slipped 7.8 percent year-on-year (YoY) due to gradual easing of the COVID-19 led lockdown versus the steep 23.1 percent contraction seen in May and 45.8 percent YoY contraction in April 2020,” JM Financial said in its comments.
It said first-quarter 2020-21 oil demand came in 26 percent lower YoY.
“Our calculation suggests that domestic oil demand for FY21 might contract about 10 percent given the sharp 26 percent hit to 1QFY21 demand and assuming that demand begins to normalize gradually over the next couple of months,” it said.
The steep decline in domestic oil demand comes amid the backdrop of moderation in oil demand growth seen since 2QFY19.
India’s FY20 oil demand growth was subdued at 0.2 percent YoY versus 3.4 percent growth witnessed in FY19 and 4.5 percent CAGR reported over the past decade.