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India's fuel demand jumped by 13 percent in the first two weeks of June, for a first monthly rise since March, suggesting that the worst of the impact of the second COVID wave has peaked and consumption is rebounding.
Sales of diesel, the most used road fuel in the world's third-largest importer, and gasoline sales have rebounded so far this month, sources with knowledge of preliminary data from the biggest fuel retailers in India told Bloomberg on Wednesday.
India has started to ease some restrictions as daily COVID cases have been falling in recent weeks, leading to a rise in mobility and use of passenger vehicles.
Road transportation fuel sales are still off last year's levels at this time, according to Bloomberg estimates.
Recovering demand in India is giving hope to the oil bulls, and to OPEC, that the third-biggest crude oil importer in the world will start to see growing consumption of oil going forward, and the worst may be behind it.
A few weeks ago, oil demand in India was clouding the outlook of global crude consumption since the devastating second COVID wave resurged in March. India's uneven—and stalled—recovery was the key source of concern about global oil demand recovery, mostly because of the unknowns about when localized lockdowns to fight the spread of the pandemic would end and lift fuel demand for transportation and economic activities.
However, all analysts and organizations, including OPEC and the International Energy Agency (IEA) continue to see a strong rebound in global oil demand despite the Indian scare, to the point of executives at oil trading houses talking about $100 oil.
Although oil may not be headed to a new supercycle, prices still have room to rise from current levels because of a strong demand rebound and expected tightness in supply, some of the world's largest commodity trading groups said this week.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com