India’s fuel demand recovers in May

The diesel and petrol sales by state oil companies have fallen by 28% and 47.5%, respectively, in the first fortnight of May from a year earlier, according to industry executives.

New Delhi: India’s fuel demand is recovering fast in May after falling at a record pace in April following the easing of lockdown that has permitted more vehicles on the roads and increased factory activity.
The diesel and petrol sales by state oil companies have fallen by 28 per cent and 47.5 per cent, respectively, in the first fortnight of May from a year earlier, according to industry executives. This is a sharp improvement from April, when the sale of diesel and petrol had declined by 56.5 per cent and 61 per cent, respectively. State companies control nearly 90 per cent of domestic fuel sales.A staggered easing of nationwide lockdown has got many factories humming back to life and more goods trucks and passenger cars on the roads, driving up demand for fuel. The first fortnight of April, which overlapped with the first and the strictest phase of the nationwide lockdown imposed to stem the spread of coronavirus had witnessed the sharpest fall in fuel demand with diesel and petrol sales falling 61 per cent and 64 per cent, respectively, from a year earlier.An expected further easing of the lockdown curbs may boost fuel demand in the second fortnight of May, executives said.Jet fuel sales, however, are barely recovering as passenger planes are still barred from flying. Jet fuel sales fell 87 per cent in the first fortnight of May from a year earlier. In April, it had declined by 91.5 per cent.The sales of liquefied petroleum gas (LPG), used mainly for cooking in the country, has jumped 24 per cent in the first fortnight of May from a year earlier, further improving its scorching growth pace of the past many months. The LPG sales in the first half of April was 21 per cent higher though for the full month reduced to just 12 per cent mainly because dealers slowed taking delivery towards the end of the month in anticipation of a sharp reduction in cooking gas prices at the beginning of May, executives said.Increased fuel demand has come as a big relief to refineries, which are now increasing their run rates. Indian Oil Corp said its refineries have raised capacity utilization to 60 per cent from 45 per cent last month and plan to raise it further to 80 per cent by end-May. A demand collapse and overflowing storage had forced all refiners to cut capacity utilization. None of the refineries was shut down though some came very close to it.

Fuel sales growth on the recovery path: