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India’s sales of diesel in the first half of September rose from the same period a month earlier, as monsoon rains eased and the government relaxed restrictions in the latest phase of its six-month Covid-19 lockdown ending this month. Gasoline sales also rose during the same period.
Diesel use in the first two weeks of September increased by 20pc to 1.06mn b/d from 885,000 b/d during the same period in August but declined by 6pc from 1.12mn b/d a year earlier as the economy continued to suffer from a rapid rise in Covid-19 cases in the country, according to preliminary data from state-run refiners, which account for around 90pc of India’s domestic fuel sales.
India’s gasoline sales in the first half of September rose to 544,000 b/d, up by 2pc from 532,000 b/d a year earlier and by 7pc from 507,000 b/d in the first half of August.
Sales of gasoline, which is increasingly being used as a substitute for diesel, are rising partly because most travel restrictions have been lifted and consumers are switching to gasoline-fuelled vehicles from diesel-powered ones.
LPG use rose by 13pc on the year in the first two weeks of September and by a similar rate on the month. Jet fuel consumption rose by 16pc on the month as domestic flights increased operations, but fell by 60pc from a year earlier.
It is unclear how fuel demand is recovering despite a contraction in India’s economy. The country’s economy contracted by 24pc in April-June and is forecast to shrink by around 15pc in the 12 months to the end of March 2021, according to US bank Goldman Sachs. Economists expect a contraction in the July-September quarter also. There is no independent fuel use forecast, with only government data available.
Fuel demand typically rises during the festive period of October-December, but rising Covid-19 cases count may temper consumption. India has overtaken Brazil to become the second-worst country hit by the outbreak and will exceed the US by early October at current growth rates. Cases have been rising at over 90,000/d over the past few days, a global record, and have exceeded 5.2mn.
A slowdown in overall consumer demand, fuelled by record job losses, will continue to crimp fuel use this year. Nearly 6.6mn white collar workers, including engineers and teachers, lost their jobs from May-August compared with over 18mn people employed in March, taking the country’s total number of workers to the lowest level since 2016 of 12.2mn. Five million factory workers also lost their jobs during the period, according to Mumbai-based think tank the Centre for Monitoring Indian Economy.
Sales of diesel, India’s most-consumed oil product, averaged 1.17mn b/d in the whole of August, down from 1.33mn b/d in July and 1.47mn b/d in August 2019, according to oil ministry data. Gasoline consumption fared slightly better, rising to 649,000 b/d in August from 616,000 b/d in July, although this was still over 50,000 b/d lower from the same period last year.