India’s Fuel Demand Continues To Abate in July
The increasing number of coronavirus infections and floods in many parts of the country have been a toll on economic activities. The demand for fuel has been abating in the country for five consecutive years and the reports continue to worsen. Diesel consumption, which accounts for about two-fifths of India's overall fuel usage is widely used in irrigation as well as for transportation but has witnessed a fall in its demand mainly in the last month.
By theMUStime
On an annual basis, the demand for diesel declined by about 19.3 percent. Though reports had stated that demand for the fuel had gone up in June than the earlier months. It reached 84.5 percent of normal levels, while petrol consumption was at 86.4 percent of normal levels.
Diesel consumption stood at 6.3 million tonnes in June, 14.5 percent higher than May. Petrol sales of 2.28 million tonnes were almost 29 percent higher than May.
The demand was normalizing in the month of June as people were using private vehicles rather than public vehicles due to fear of contracting Coronavirus and due to easing up of lockdown in many states. However, the demand for diesel had fallen to 5.52 million tonnes last month from 6.31 million tonnes in June.
Sales of gasoline, or petrol, were down 0.8 percent from 2.28 million tonnes in June. The possible reason for the decline in the last month is the renewed lockdown and new containment zones being designated due to an increase in cases.
Consumption of refined fuels, a proxy for oil demand, fell to 15.68 million tonnes in July, 3.5 percent below the prior month, data from the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Petroleum & Natural Gas showed.
The Causes
Coronavirus cases in India stand at 2 million, which makes it third, following the United States and Brazil in the list of top most corona virus-infected countries. All the economic activity and travel were put to a halt to prevent the spread of the virus.
Besides, heavy rain and floods in many parts of the country have affected millions of people and have battered industrial construction activity.
India's top refiner, Indian Oil Corp, said last month it would continue to operate its refineries below capacity in 2020/21, and that it didn't see a recovery in demand to pre-COVID levels "in the near future."
Sales of bitumen, used for making roads, slipped about 45 percent month-on-month.
The world’s third-largest fuel consumer and importer have plunged into the lows as high retail prices have hit the demand. India's diesel price has touched a record high of 81.35 rupees ($1.09) a liter on Friday in New Delhi, slightly higher than that of petrol.
Retail sales are down because of reimposed lockdown and higher retail prices," said Sri Paravaikkarasu, director for Asia oil at consultancy FGE.
Naphtha consumption in March was up 1.38 million tonnes, possibly because of its increased use in power plants. In July, the sales had fallen to 1.28 million tonnes.
In total, India's fuel demand dipped 11.7% in July.
What's Your Reaction?
