After a robust January 2022, February was a tad bit slower for the petroleum consumption in the country. The oil marketing companies witnessed a month-on-month decline in overall sales volumes of petroleum products by 15 percent month-on-month as per the latest numbers from the OCAC. The decline was led by 20 percent month-on-month fall in high speed diesel volumes followed by furnace oil and motor spirit by 13 and 12 percent month-on-month, respectively.
The slowdown in February after January was due to fewer days in the month versus the latter. But the decline also came from weaker consumption of the retail fuels amid rising prices. In case of motor spirit, the decline in volumes was also accompanied by a shift to HOBC consumptions as the price differential between the two continued to close. In case of diesel volumes, the decline in February month-on-month was also due to significant power generation shifted to diesel amid fuel shortage in January, and hence higher consumption of HSD in January – which is being taken as a one-off event. And in case of furnace oil, the decline in volumes sold was also due to lower demand from power sector
Despite the month-on-month slowdown witnessed in the oil sales by the oil marketing companies, the same continued to increase year-on-year and in the overall 8MFY22. OMC sales of petroleum products increased by 10 percent year-on-year in February 2022.
The growth was led by 24 percent year-on-year growth in furnace oil followed by 8 percent and 4 percent year-on-year growth in diesel and petrol volumes. In 8MFY22, the petroleum consumption in the country increased by 14 percent year-on-year.
The year-on-year rise in petroleum sales in February was due to continued growth in vehicle sales; recovery in power demand and hence the use of FO for power generation; higher agricultural activity spurring HSD volumes sold; and overall better economic activity in Feb-22 than Feb-21.
While overall, petroleum sales have increased, the last couple of months barring January 2022 were relatively slower. Sales of petroleum product declined for the second straight month in December-21, month-on-month. However, this reversed in January 2022 where the petroleum product sales during the month were seen climbing by 20 percent month-on-month. And then February 2022 sales were seen growing by 14 percent year-on-year. A key factor in restricting growth in monthly retail fuel sales has been the rising prices as seen in the illustration.