The slow demand of petroleum products is not reversing. The overall consumption is down where sales by the oil marketing companies are struggling to pick up – barely keeping pace with yesteryears.
The OMC sales data for December 2019 ended 1HFY20 and CY19 not with a bang but with a whimper. In December 2019, the overall petroleum product sales by the OMCs were clipped by 5 percent year-on-year. Of the three key petroleum products, the downward trajectory of furnace oil and high speed diesel continued. FO was down by 42 percent while HSD was lower by 2 percent, year-on-year. Slow economic activity and transportation growth have been snipping diesel sales along with the inflow of grey product. While FO sales have been down on account of lower demand from the power sector. Also, despite the recent decline in FO prices that has made power generation through FO less expensive, the fuel has been losing its luster to LNG and coal based power generation. At the same time, the winter season comes with lower power demand, which is also not helping FO upliftment and consumption.
On the other hand, motor gasoline has remained elevated, where the recent growth of 7 percent year-on-year in December 2019 has also been due to rising prices of CNG and the curtailment of CNG in the winter season, which has shifted the consumption further to MS.
Overall, the 1HFY20 and CY19 picture is no different. The decline in the overall OMC sales that begun FY18 continues where FO has been leading the decline in volumes, while petrol has been trying to support the falling volumes. In 1HFY20, FO led the decline- falling by 19 percent year-on-year followed by HSD (down 10%YoY), while MS up by 5 percent year-on-year.
Any visible recovery in the overall volumes rests on economic turnaround, which might not be in sight just yet. Meanwhile, expect the sluggishness in OMC volumes to continue as the winter is that time of the year when demand is generally lower.
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