The Oil Companies Advisory Council has recently released petroleum product sales for October 2020, and it can be seen that the rising furnace oil is building into a trend. Volumetric sales by the oil marketing companies for 4MFY21 grew by around nine percent, year-on-year where furnace oil led with 33 percent year-on-year increase; and motor gasoline and high speed diesel remaining in single digits growth rates at 6 and 8 percent.
The growth in furnace oil is particularly noticeable because its use as fuel oil in the power sector has been on a downward slide, being replaced by coal and RNLG. However, with severe gas shortage in the offing this winter along with limited RLNG due to port capacity, FO has made inroads into leading the overall petroleum consumption once again. Though month-on-month growth in FO was negative 22 percent partly due to changing weather and lower power demand, the trend of FO leading can be seen in year-on-year FO sales in October 2020 standing 46 percent higher than October 2019.
Retail fuels – motor gasoline and high speed diesel remained flat year-on-year in October 2020 at 1 and 3 percent, though the month-on-month increase in diesel was seen as the country returned from a heavy monsoon month in September 2020. The explanation for slow growth in motor gasoline could entail the argument that petrol sales are now stabilizing after the abnormal growth seen in the three months from June till August 2020. Whereas diesel volume slowdown could be explained by the return of grey product as the country returns to normal after months of border movement restriction due to COVID-19.
Petroleum consumption currently in the country is a good omen for the volumetric growth as they are likely to continue this upward trajectory as the economic activity inches up post COVID-19 restrictions and lockdowns. However, the rising number of active cases is heralding a second wave, which many are considering might suppress the ongoing trend. Though with the PM ruling out any more lockdowns and the expected shortage of gas, OMCs might not be as jittery as they were when the pandemic first hit.
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