India’s fuel demand highest since April amid easing of local Covid-19 restrictions

Demand for fuel in India recovered in July, climbing to a three-month high as severe restrictions put in place due to the Covid-19 pandemic are gradually being eased in most states, stimulating industrial activity and mobility.

July fuel consumption rose by 2.9% against the previous month, reaching 16.83 million tons, according to data from the Petroleum Planning and Analysis Cell (PPAC). Year-over-year growth reportedly totaled 7.9%.

India’s fuel consumption in May dropped to a nine-month low as the nation imposed tough restrictions and lockdowns in most of the states due to the second wave of the coronavirus.

Consumption is expected to be flat for another month, but will seasonally accelerate in the fourth quarter, raising the use of fuel to pre-pandemic levels, according to Natixis commodities strategist Joel Hancock, as quoted by Reuters.

“There will be an impact of higher prices on consumption but the broader pandemic recovery trend will outweigh this – so we’ll still get growth on a year-on-year basis and relative to 2019,” he said, stressing that soaring petrol and diesel prices would unavoidably limit the recovery.

In July, year-on-year consumption of diesel, which accounts for nearly 40% of India’s refined fuel sales, grew by 11.5%, amounting to 6.14 million tons. However, diesel sales were still down 1% from the same period last year.

Meanwhile, sales of petrol rose by more than 16% to 2.63 million tons compared to July 2020, and were up 9.2% from June. Sales of liquefied petroleum gas increased to 2.37 million tons, marking a year-on-year increase of 4.6%, while bitumen sales were reportedly up 4.1%. Sales of naphtha reportedly dropped by about 5.3% to 1.21 million tons, while fuel oil consumption was 5.1% lower.

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