Budget 2020

Fuel demand drops 3.6% year-on-year in November

Rises sequentially for 3rd straight month.

India’s fuel demand fell 3.6% year-on-year in November, reversing the return to normal consumption levels attained in the previous month.

Total demand for petroleum products in November fell to 17.83 million tonnes from 18.51 million tonnes a year earlier, provisional data published by the Oil Ministry’s Petroleum Planning and Analysis Cell showed.

Fuel consumption, however, posted a month-on-month increase for the third straight month, helped by reviving transportation and business activity.

India consumed 17.75 million tonnes in October — the month in which fuel demand posted its first yearly increase since February as a spurt in diesel demand ahead of the festival season pushed consumption to pre-COVID-19 levels. In October, demand for petroleum products rose 2.5% compared with the year earlier period.

While petrol had reached pre-COVID-19 levels in September itself, diesel consumption returned to normal in October. However, its demand fell again in November.

Diesel demand, which had soared 7.4% year-on-year in October, dropped 6.9% in November to 7.04 million tonnes. Month-on-month, the demand slightly improved from 6.99 million tonnes. Fuel demand had slumped by 49% in April after a nationwide lockdown, imposed to curb the spread of COVID-19, shut industries and took most vehicles off-road.

The 69-day nationwide lockdown was followed by local and State-level restrictions. Restrictions have eased only slowly and in phases, while localised restrictions in containment zones remain.

Festive season trend

The onset of the festive season has fuelled a rise in consumption, but public transport has not returned to normal levels yet as schools and educational institutions continue to remain shut in most parts of the country.

Demand for naphtha, which is used as industrial fuel for generating electricity as well as producing petrochemicals, surged 7.7% to 1.3 million tonnes in November.

This, together with a rise in other industrial fuels such as fuel oil, indicates the return of economic activity.

Also, consumption of bitumen, used in road construction, jumped by 18% to 6,92,000 tonnes.

LPG, the only fuel that showed growth even during the lockdown period on the back of the government giving free cooking gas to the poor, rose 4% to 2.3 million tonnes.

But month-on-month, it posted a 2.8% fall.

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