Dwindling volumes have been seen in the petroleum sector in the recent past. Furnace oil particularly has been facing the cut as the country has found its alternative in LNG and coal – cheaper than the fuel oil. Besides, the much celebrated retail fuel growth has also started waning in the last few months. Unlike previously where petrol and diesel sales were somewhat balancing the furnace oil falling volumes, the high growth in retail fuels have also eased down.
For March 2019, the drag in petroleum volume has come from more than just furnace oil. High Speed Diesel (HSD) is down too. The two petroleum products (FO and HSD) witnessed a decline of 50 and 21 percent, respectively on a year-on-year basis in March 2019. And petrol (Motor Gasoline) was the only fuel of the three key petroleum product that depicted a growth in volumetric sales to the OMC sector (up by 8% YoY). Apart from the three key products, a significant decline of 42 percent year-on-year was also witnessed in JP-1 in March 2019.
While the decline in jet fuel was largely due to closure of the country’s airspace for a good number of days, slow economic growth has been the overriding factor in the overall fall in petroleum sales; changing economic policy regarding FO, reduced economic and transport activity, lower car sales, higher smuggling of diesel amid higher prices, etc.
The narrative for 9MFY19 has been similar to the monthly volumetric position; the industry sales of petroleum products were down by over 25 percent, year-on-year, where FO and HSD volumes dropped by 59 and 20 percent, respectively in the nine-month period and petrol volumes remained flat (up by 1% YoY)
As the summer season approaches, it is expected that the consumption of petroleum products especially furnace oil will inch up, though imports are likely to remain banned. However, higher prices are likely keep a lid on the overall consumption of retail fuels.
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