India's petrol, diesel sales improve in May, full recovery months away

SINGAPORE: India's gasoline and gasoil sales in jumped sharply in May compared with April in a recovery from historic lows, after a partial easing of the lockdown imposed to curb the coronavirus pandemic, provisional sales data showed on Monday.

But industry analysts expect a full-scale recovery to pre-COVID-19 consumption levels in India to be months away as the monsoon season approaches while manufacturing activities remain low and transportation demand takes a hit in some parts of the country.

State-retailers' gasoline sales in May rose by about 83pc from April to about 1.6 million tonnes.

Sales of gasoil, which accounts for about two-fifths of the country's overall fuel sales, rose by about 69pc in May compared with April to 4.8 million tonnes, provisional sales data from state fuel retailers showed.

However, gasoline and gasoil sales in May are still down by about 36pc and 31pc respectively from a year earlier, after contracting more than 50pc in April year on year.

State companies Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum own about 90pc of the retail fuel outlets in India.

The sources who provided the provisional industry data asked not to be identified citing confidentiality.

Sales of liquefied petroleum gas (LPG) rose 13pc in May from a year ago while jet fuel declined by 85pc during the same period.

"April likely marked the nadir with diesel demand slumping by more than 50pc y-o-y," said Emma Richards, senior oil & gas analyst at Fitch Solutions.

Fitch expects India's 2020, diesel demand to decline by 14pc from a year ago, and sees a full-scale recovery in fuel demand in 2021-2022.

The June-September monsoon season and Covid-19 related disruptions will cap India's oil consumption in the third quarter, Richards said.

FGE Energy analyst Senthil Kumaran said India's gasoline consumption could return to pre-COVID level by October but gasoil demand would recover only towards the end of the fourth quarter of this year.

"Manufacturing will be the key basis for a spur in gasoil demand but we don't see that picking up to the full level until end of this year," Kumaran said.

Gasoil demand will contract by 8pc in July-December versus the same period a year ago and then grow 7.7pc in first quarter of 2021, he said.

FGE expects India's overall fuel demand to grow by 3pc in the first quarter of 2021 from a year ago.