Every time furnace oil volume consumption was seen falling, it was assumed that either the IPPs are facing liquidity problems, or the oil marketing companies particularly PSO is cash strapped. That’s because of the power sector is the largest consumer of furnace oil.
However, this time the fall in furnace oil volumetric sales by the oil marketing companies is due to the introduction of another fuel –liquefied natural gas (LNG) that has been imported in the country for the first time. Analyst at Foundation Securities estimate around 200mmcfd of LNG has made its way into the country in May 15, which has eliminated around 180,000 ton of furnace oil. In this context, furnace oil consumption fell by 13 percent in May 2015 when compared to April 2015. The same dropped by two percent year-on-year in 11MFY15.
On the other hand, the retail fuels continued to accelerate in demand, especially motor gasoline; the increase in monthly volumes is attributed to CNG curtailment, and higher demand in transportation sector. In 11MFY15, motor gasoline consumption jumped by 21 percent year-on-year, while in May 2015, observed a growth of eight percent month-on-month.
Similarly, diesel volumes also touted a healthy growth of eight percent year-on-year in 11MFY15, and 19 percent month-on-month in May 2015 alone due to higher demand on agriculture sector.
Overall, the rising seasonal demand and falling international crude oil prices continue to define the petroleum volumes being sold by the oil companies. The fiscal year is about to come to an end, and the industry witnessed a four percent year-on-year volumetric growth in 11MFY15. On a month-on-month basis, the consumption in May 2015 shows a rise of two percent in aggregate. Major petroleum products that include furnace oil and retail fuels like HSD and petrol (motor gasoline) has seen a jump of six percent year-on-year, while the same in May 2015 alone saw three percent rise.
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