India’s fuel consumption in December 2021 scaled a nine-month peak, government data showed on Tuesday, although a fresh coronavirus wave may slow the gradual recovery of demand in the world’s third biggest oil consumer.
Fuel consumption, a proxy for oil demand, totalled 18.43 million tonnes, up 7.6 per cent from November and 0.4 per cent from a year before, data from the oil ministry’s Petroleum Planning and Analysis Cell showed.
But consumption was still about 3 per cent lower than December 2019, shortly before the coronavirus pandemic broke out.
The Indian oil market “has bounced back post COVID-19 and we expect it to continue,” said Phil Flynn, senior analyst at Price Futures in Chicago.
There are signals of strong output – refinery runs rose to a two-year high in November – and while demand is up relatively modestly from December 2020, January 2022 could be a ‘blockbuster’ month, Mr Flynn added.
Consumption of diesel, accounting for about 40 per cent of India’s refined fuel sales, grew 12.2 per cent month-on-month to 7.31 million tonnes, their highest since December 2019, and 1.6 per cent from the same period last year.
However, “the recent surge in Omicron cases will no doubt weigh on activity and put a dent in the demand figures early in the new year,” said Craig Erlam, senior market analyst at OANDA. “But the broader trend remains positive and should recover once this next wave passes.”
Sales of gasoline, or petrol, rose 6.4 per cent from November to 2.82 million tonnes, a record-high as per data going back to 1998, and were 13.9 per cent higher than December 2019, and about 4.1 per cent year-on-year.
The recovery is in full swing, with the exception of some headwinds, and high oil prices may slow, but not derail it, said Refinitiv analyst Ehsan Ul Haq.
Sales of cooking gas, or liquefied petroleum gas (LPG), declined nearly 1.9 per cent to 2.48 million tonnes year-on-year, while naphtha sales fell 2.1 per cent to 1.19 million tonnes.
Bitumen sales fell 18.8 per cent, while fuel oil use rose 2.5 per cent in December.