Petroleum consumption is picking up again. The 8-month volumes sold by the oil marketing companies have been higher than last year - and higher than 2019 levels for a similar period. Most of the rise in sales in 8MFY21 is being linked to the increase in economic activity during recent months versus 8MFY20 highlighted by COVID-19 restrictions and lockdown.
As per the data released by the OCAC, last month – February 2021 saw a growth of 26 percent year-on-year in petroleum consumption, which is just the opposite to what February 2020 brought - a decline of 26 percent in petroleum sales by oil marketing companies. In Feb-21, all the three key petroleum products experienced double digit growth in volumes with diesel leading. Furnace oil volumes in Feb-21 were up by 25 percent whereas the retail fuels, High Speed Diesel and Motor Spirit were up by 47 percent and 15 percent year-on-year, respectively. Growth in petroleum consumption in Feb-21 was driven primarily by better demand; recall that Feb-20 was the start of pandemic restrictions.
8MFY21 petroleum sales stood up by 13 percent year-on-year with furnace oil and HSD leading with 37 percent and 16 percent growth, respectively. Besides the economic wheel moving, growth in petroleum demand is also attributable to comparatively lower prices of retail fuels in recent months, revival of growth in car sales, and restrictions on CNG availability as well as on grey product.
Though the month-on-month petroleum product sales saw an 8 percent decline, it was primarily led by furnace oil that will most likely start rising again as summer months approach and demand for power generation increases. At the same time, no changes in the prices of retail fuels recently –particularly motor spirit—will also support the fuel’s demand. Going forward, next couple of months starting March will continue to post growth in petroleum volumes sold by the OMC as in 2020 these months were exceptionally weak due to COVID rearing its head and restricted demand.