With only two months into FY21, and it seems that the year will be better for oil sales. Or maybe just that oil sales are back to normal. That is not only because of record high monthly volumes of petrol for three consecutive months – June, July, and August 2020 – but also because the worst from COVID-19 might just be over. Petroleum sales started FY21 on a much positive note and many believe the volumes have bottomed out.
After an upbeat June and July, August 2020 is the third month where the oil marketing companies continue the growth momentum. Oil volumes in August increased by over 20 percent year-on-year. The growth in August 2020 was significantly driven by 70 percent year-on-year increase in furnace oil sales, while petrol and diesel grew by 10 and 25 percent year-on-year, respectively. Furnace oil demand has been picking up consecutively for the past two months i.e. July and August, which is expected to have come from increased demand from the power sector as the government allowed FO imports and that the LNG supply to power sector remained low during the period. Even during the ongoing Monsoon season highlighted by flash flooding, furnace oil volumes increased – as can be seen from 30 percent month-on-month growth in August 2020. However, diesel and petrol volumes suffered in August versus the previous month (July 2020) due to the rains.
Overall, 2MFY20 petroleum sales show a growth of 14 percent year-on-year. This was led by 24 percent growth in HSD, followed by 15 percent furnace oil and 12 percent petrol. The growth drivers include some measures in places like curb on border movement as well as improving situation of COVID-19 in the country and the resulting resurgence in economic activity.
Going forward, there might be tapering off of FO volumes as demand for power generation goes down in the winter months. Petrol sales will likely remain consistent and diesel sales that have remained on an upward trajectory might see some seasonal downturn -the beginning of which is already experienced in August.
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