India's fuel demand, except ATF, has returned to pre-COVID levels and a boosting economy will help utilization grow in near future, head of the nation's top oil company said on Tuesday.
Fuel sales had dropped by a record 45.8% in April last year when a nationwide lockdown was imposed to ensure the spread of coronavirus infections. Demand started to recuperate with the reduction of lockdown restrictions, with petrol returning to normal growth first and now diesel too is back at pre-COVID levels.
"Expect for ATF, we have touched normal demand," Indian Oil Corporation (IOC) Chairman Shrikant Madhav Vaidya stated. "We are back on track."
While petrol sales had reached pre-COVID levels a few months before, diesel was up 7.4% year-on-year in the first half of March.
LPG sales showed growth even during the lockdown.
With airlines not operating all flights, ATF sales remain below normal.
"ATF may take a quarters time to return to normal, maybe 3-4 months," he said.
IOC, he said, is optimistic about fuel demand recovery as the economy grows.
"Let's hope for the best with the vaccine rollout," he said.
Diesel sales in the first half of March rose to 2.84 million tonnes while petrol demand was up 5.3% to 1.05 million tonnes.
This is the first annual rise in petrol sales since October. ATF sales, which drop by more than 80% in the aftermath of the lockdown, were down 36.5% in the first half of March.
India's economy came back to positive growth territory in the fourth quarter of 2020 as its real GDP expanded by 0.4% year-on-year after two quarters of contraction. This was after provincial and localised lockdowns were lifted in the middle of a fall in the daily number of new COVID-19 cases.
Crude oil suppliers group OPEC's monthly oil report last week forecast a 13.6% jump in India's oil demand in 2021 to 4.99 million barrels per day.
India's oil demand had fallen 10.54% in 2020 to 4.40 million bpd from 4.91 million bpd in 2019.
"The encouraging macroeconomic indicators, together with significant decreases in COVID-19 cases across the country, provided a solid foundation for the 2021 oil demand outlook in India," the report stated.
The latest positive developments in industrial activities will result in industrial fuels being the backbone for oil demand growth in 2021, with a healthy rebound for transportation fuels providing further support, it said adding the aviation sector will remain under pressure all through 2021 and will also be a major source of uncertainty.
"Despite some improvements month-on-month, domestic flight operations remained more than 10% lower than the levels recorded during the same period in 2020," the OPEC report said.
In 2020, India's GDP contracted by 7%, but it is forecast to grow by 9% in 2021.
"Following the 0.4% growth registered in 4Q20, India's was one of the few major economies to post growth in the quarter as lockdowns eased, and this rebound is expected to continue as consumption manufacturing activity rise," the OPEC report said.
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