Oil Sales Signal Little Hope for V-Shaped Recovery in India
India’s diesel sales fell 20% MoM and 23% YoY in early-August. State-level lockdowns add to seasonal slump in diesel demand.
(Bloomberg) -- For a glimpse into the impact of rolling lockdowns and sputtering factory sales on Asia’s second-biggest oil importer, look no further than India’s fuel purchasing patterns.
The sale of diesel -- the country’s most-used fuel and a proxy for its economic health -- slumped 20% in the first half of August from the same period in July, according to people familiar with preliminary data from the country’s three biggest fuel retails. Sales were down almost a quarter from a year earlier, more evidence that India’s economic recovery from Covid-19 is stalling or going backwards.
If trends observed in the first 15 days extend to all of August, that would translate to a second monthly decline in diesel sales following an initial rebound when India started to emerge from the world’s biggest national lockdown of 1.3 billion people in May. While heavy rains tend to weigh on diesel demand during this time of year, the sharper-than-normal drop is also being driven by localized lockdowns in some of India’s most-industrialized states.
Based on the data, sales of diesel, jet fuel and liquefied petroleum gas dropped from July and also fell from year-earlier levels. Gasoline eked out a small gain as commuters opted for private transport over crowded buses and trains.
It remains to be seen if the plunge in demand for diesel, a fuel used to power on-site generators found in factories and farms, is a forewarning of an economic contraction and a continuation of the slump in factory output, which fell for a fourth month in June.
Indian refiner Bharat Petroleum Corp. offered 75,000 tons of diesel for loading this month as processors resort to shipping domestically-made cargoes abroad in efforts to cope with the oversupply and high inventories.
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