India’s fuel consumption in December 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% from November. And 0.4% from a year before, data from the oil ministry’s Petroleum Planning and Analysis Cell showed.
But consumption was still about 3% 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, Flynn added. Consumption of diesel, accounting for about 40% of India’s refined fuel sales, grew 12.2% month-on-month to 7.31 million tonnes. Their highest since December 2019, and 1.6% 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% from November to 2.82 million tonnes. A record-high as per data going back to 1998, and were 13.9% higher than December 2019, and about 4.1% 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% to 2.48 million tonnes year-on-year, while naphtha sales fell 2.1% to 1.19 million tonnes. Bitumen sales fell 18.8%, while fuel oil use rose 2.5% in December.