Petrol demand continues to rise in Aug, diesel lags

India's fuel demand recovery remained patchy in August as petrol consumption continued to rise but diesel sales fell, preliminary data from state fuel retailers showed on Wednesday.

While petrol sales are already above pre-COVID levels, diesel continues to lag.

State-owned fuel retailers sold 2.43 million tonnes of petrol in August, up 13.6 percent from the year-ago period. It was 4.1 percent higher than pre-COVID petrol sales of 2.33 million tonnes in August 2019.

Sales of diesel - the most used fuel in the country - rose 15.9 percent to 4.94 million tonnes during August 2021 over the previous year, but was down 9.8 percent from August 2019.

August diesel sale was also 9.3 percent lower than the previous month, mostly because of lower mobility due to monsoon.

Diesel consumption was 8 percent lower than pre-COVID levels in the first half of August.

Fuel demand had recovered to near-normal levels in March before the onset of the second wave of COVID-19 infections led to the reimposition of lockdown in different states, stalling mobility and muting economic activity.

Consumption in May slumped to its lowest since August last year amid lockdowns and restrictions in several states. Fuel demand showed signs of resurgence in June after restrictions began to be eased and the economy gathered pace.

On July 30, S M Vaidya, Chairman of India's largest oil firm IOC, had stated that petrol consumption has risen over pre-COVID levels as people prefer personal transport over public transport.

Diesel sales, he said, were likely to return to pre-pandemic levels by Diwali in November if the third wave of COVID infections does not lead to the reimposition of lockdown.

ATF consumption, which had seen the most severe fall as air travel was restricted beginning March 2020, is likely to return to normal by the end of the current fiscal year in March, he had said.

Consumption of LPG, the only fuel which showed growth even during the first lockdown because of free supplies by the government to the poor, rose 1.85 percent year-on-year to 2.32 million tonnes in August. It was however 2.4 percent lower than August 2019.

With airlines yet to resume full-scale operations because of travel restrictions around the globe, jet fuel sales at 350,000 tonnes were up 41.7 percent year-on-year but 44.5 percent lower than in August of 2019.

India's oil demand had dropped by 0.5 million barrels per day in 2020, led by a steep weakening in transportation fuel, mainly in April-June 2020.

Extended lockdown measures, coupled with limitations on mobility, diminished oil product requirements. Petrol and jet fuel recorded historical declines compared with the same period in 2019. Diesel was down, in line with weakness in industrial activity, as well as in road construction and agriculture.