Overall, the petroleum consumption and sales of petroleum products by the oil marketing companies continue to grow and post double digit growth figures.
The recent data shows that petroleum products sales by the OMCs in 11MFY22 were up by 18 percent year-on-year where MS, HSD and FO were up by 11 percent, 18 percent, and 36 percent, respectively. The largest growth has been that of furnace oil due to increased usage of the fuel in the power sector again!
Petroleum products sales in May 2022 declined by around two percent month-on-month. However, since the price hike was announced towards the end of the month, the decline is mostly due to fewer number of working days during the month where Eid fell right at the beginning of the month. Also, a 7 percent month-on-month decline in HSD volumes due to the ongoing harvesting season also pulled volumes down.
On a year-on-year basis, May sales were up by 28 percent, again fueled largely by furnace oil due to increased demand by the power sector amid rising electricity shortfall and load shedding. FO sales were up by 174 percent year-on-year, and flat month-on-month. HSD volumes in May-22 were higher by 12 percent year-on-year, and MS volumetric sales were up by 11 percent year-on-year.
The unabated consumption of petroleum products was necessary to be brought down to control inflation. Demand destruction is the only way to get out of the inflation trap. The increase in prices for retail fuels has been significant and is expected to bring a further slowdown in the OMC volumetric sales.
Petrol (MS) demand will slowdown in the upcoming months as the subsidy phases out, GST and petroleum development levy are brought back, and the economy continues its jittery growth. Diesel (HSD) sales will also weaken as the economic activity slows, and transport becomes expensive as further price hike is in the offing. Furnace oil might continue to show growth at least in the summer months due to rising energy shortfall.
Comments
Comments are closed.