Fuel demand in India continues to slump this month amid the COVID crisis in the world's third-largest oil importer, with Gasoline sales down to a one-year low and diesel consumption dropping to the lowest in seven months in the first two weeks of May.
Sales of Gasoline and diesel plunged by 20 percent in the period May 1-15 compared to April, when demand was already deteriorating, sources with knowledge of data from the three biggest fuel retailers told Bloomberg.
Compared to the same weeks in 2020, road fuel sales plummeted by 28 percent, according to the sources familiar with preliminary data of the sales of Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation, which, combined, account for 90 percent of India's sales of fuels.
Most of India has been under local lockdowns since April when the resurgence of COVID started to overwhelm the healthcare system. The central government, however, is resisting calls for a nationwide lockdown, fearing a backlash on economic growth.
As India continues to fight the COVID resurgence, the infections are now spreading to rural areas. Daily new cases are now below the peak of over 400,000 from early May, but on Friday, the country reported a third consecutive day of more than 4,000 deaths.
Due to the COVID crisis, Indian fuel demand plunged by 9.4 percent in April compared to March, according to official data cited by Press Trust of India last week.
Oil demand in India is the main drag on the expected lower-than-previously-thought global oil demand this quarter, OPEC warned in its monthly report last week. The cartel, however, is optimistic that accelerating vaccination programs and rising fuel demand will raise global oil demand by 5.95 million barrels per day (bpd) this year despite the current COVID crisis in India, and kept its 2021 demand outlook unchanged from last month.
By Tsvetana Paraskova for Oilprice.com
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Comments
The reason is that the bullish influences in the global oil market such as a growing optimism about the global economy and end of the glut in the market overwhelmingly outweigh any demand decline by India.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London