The consumption of petroleum products in the country improved during October as compared to the previous month (MoM), which was primarily due to the low base during September as floods destroyed demand significantly. During October, total volumetric sales by the oil marketing companies increased by nine percent month-on-month with noticeable jump in petrol and diesel as activity like transport, travel, mobility resumed to previous normal and the Rabi crop season commenced. This was accompanied by some decline in petrol and diesel prices as well.
However, year-on-year, the sales of petroleum products remained tepid – falling by 16 percent year-on-year in October-22 due to weaker economic activity in the ongoing year, automobile sales, and higher prices than last year. Furnace oil sales were down by 37 percent year-on-year due to weaker thermal power generation demand; while diesel and petrol sales were lower by 15 and 11 percent year-on-year, respectively.
Overall, in 4MFY23, OMC sales of petroleum products were down by around 22 percent, driven lower by weak economic situation, falling LSM, declining automobile sales, and lower mobility and transport activity during the last three months due to floods. Furnace oil and high speed diesel sales were down by 26 percent year-on-year each, while motor gasoline sales were lower by 18 percent year-on-year.
Going forward, the petroleum demand in the country will continue to remain weak due to the ongoing political uncertainty, high inflation and significant economic slowdown. The coming winter months can push up FO based power generation amid shortage of gas as well as RLNG. However, the high prices and affordability will likely impact overall consumption in FY23.