Indian transport fuel demand drops further in August

Indian transport fuel demand has fallen further as the Covid-19 outbreak in the country shows no sign of coming under control.

Diesel consumption fell by 19pc in the first two weeks of August compared with a month earlier and was down by 23pc from the same period in 2019, state-controlled refiners said, without giving actual demand figures.

Gasoline demand edged up by 2pc in the first half of August from a month earlier but was down by 6pc from a year earlier. Jet fuel sales fell by 2pc and by 66pc from a month and year earlier respectively, while LPG consumption was down by 6.5pc from the first half of July and lower by 8.5pc from a year earlier.

The data from state-controlled refiners covers around 90pc of domestic sales.

Indian fuel demand is continuing to decline, despite moves by the federal government to ease more restrictions in its latest lockdown phase that ends 31 August in an attempt to lift economic activity. But a surge in Covid-19 cases has sent the economy into a tailspin and prompted local authorities to impose their own lockdowns, leaving state-controlled oil company officials unable to predict when fuel use will rebound.

State-controlled refiners have adjusted throughputs in line with demand and are now operating at average run rates of around 75pc, down from over 90pc in early July. The lower run rates will hit imports of crude, which already fell by 19pc year on year in June to a near nine-year low of 3.34mn b/d.

The month-on-month declines in fuel demand brings an end to a recovery that started in May and consolidated in June but then reversed course. Coronavirus cases are rising sharply in India, which is the third-worst hit country behind only the US and Brazil with almost 2.7mn cases. The cities most affected by the virus, including Mumbai, Chennai, Kolkata, Bengaluru and Hyderabad, are imposing their own lockdowns, hurting fuel use and industrial activity.

India consumed 1.47mn b/d of diesel, 702,000 b/d of gasoline, 170,000 b/d of jet fuel and 2.4mn t of LPG in August 2019, according to oil ministry figures. Diesel demand in July 2020 was 1.33mn b/d, while gasoline demand averaged 617,000 b/d, according to oil ministry figures, which include sales by private-sector firms.

By S Dinakar