India’s petroleum product consumption has sharply recovered from the lowest slump recorded since 2007, after the world’ longest lockdown ended and reached 88% last month, the petroleum ministry said on Wednesday.
Also, the demand for bitumen used in road construction has gone up by 32% in June as compared to last year, due to the road building activity picking up.India’s power and overall energy demand, which had nosedived, is slowly returning to its pre-lockdown levels. Consumption of energy—especially electricity and refinery products—is typically linked to overall demand in an economy.
“India’s overall petroleum products consumption, which had nosedived in last week of March and April this year, is now steadily getting to its pre-lockdown levels in June’20, as emanating from the PSUs’ (IOC, BPC and HPC) sales figures,” the petroleum ministry said in a statement.
Mint reported on 5 June that traffic congestion, power generation, port activity, vehicle registration and other high-frequency data point to the economy perking up as India reopens, recovering from a devastating slump as factories went idle and people were ordered to stay at home amid the pandemic.
However, the jump in demand has been accompanied by an increase in transportation fuel prices and that of domestic cooking gas.The aviation turbine fuel (ATF) prices were raised by 7.5% on Wednesday, the third such hike within a month. Also, the price of non-subsidised liquified petroleum gas (LPG) for a 14.2 kg cylinder was raised. While the price went up by Rs1 in Delhi, the increase was around Rs4 in metros.
This comes in the backdrop of the state-owned oil marketing companies (OMCs) increasing petrol and diesel prices daily, after pausing for nearly three months during the world’s most stringent lockdown. The diesel and petrol prices remained unchanged on Wednesday.
“On Industry basis, in June’20, the petrol consumption has reached to 85% of last year level (2.0 MMT in June’20 vs 2.4 MMT in June’19) and diesel reached to 82% (5.5 MMT in June’20 vs 6.7 MMT in June’19) compared to last year level,” the statement said.
Retail prices of petrol and diesel in India track global prices of auto fuels, not crude, though they are broadly linked to the latter’s price trends.“With timely arrival of monsoon and pick-up in agricultural activities during kharif season, there was marked acceleration in diesel consumption and gained a 96% on April ’20 level volume (5.5 MMT in June’20 from 2.8 MMT in Apr’20),” the statement added.
India started unlocking its economy in phases beginning 8 June, allowing more economic activity. Indian Oil Corporation Ltd (IOC), the country’s largest fuel retailer said last week that demand recovery has been faster than anticipated, and its capacity utilization, which had shrunk to around 35% at the beginning of the coronavirus lockdown is expected to run at full capacity by June end.
“Overall the consumption of all petroleum products has significantly increased from April’20 level of 49% (6.6 MMT in Apr’20 vs 13.4 MMT in Apr’19) to 88% level in June’20 (11.8 MMT in June’20 Vs 13.4 MMT in June’19), as this comes in the backdrop of Indian economy gradually getting momentum with the ease of lockdown restrictions and revival of economic activities that are slowly getting back on track,” the petroleum ministry statement said.
Green shoots have sprouted in the the world’s third largest oil consuming economy, since the country began easing restrictions after a lengthy lockdown.
“Demand of Industrial fuels such as Sulphur, Petcoke and Naphtha reached to levels of 89.3%, 118% & 80.7% respectively, while marine fuels reached to a level of 138.5 % vis-a-vis corresponding period last year. The crude oil throughput of OMCs refineries has already crossed 85% as on date, from as low as of 55% in the beginning of April’20,” the statement said.
Speaking at a webinar on Wednesday, petroleum minister Dharmendra Pradhan said that India is all set to emerge as one of the primary drivers of growth in gas demand in Asia, despite the pressing Covid-19 challenges.
Speaking at the same webinar, Paris-based International Energy Agency (IEA) executive director Fatih Birol said that on a longer term basis, India will be at a centre stage of all global energy players.
With the world slowly reopening businesses, oil prices have been up after April’s downward spiral, when demand almost vanished. The cost of the Indian basket of crude, which comprises Oman, Dubai and Brent crude, averaged $56.43 and $69.88 per barrel in FY18 and FY19, respectively. It was $19.90 in April and $30.60 in May, according to data from the Petroleum Planning and Analysis Cell. The price was $42.01 a barrel on 30 June.