Timeout in petroleum sales

After a hearty FY15, the petroleum sales - a fair proxy for petroleum consumption in the country - have taken a breather, slowing down in the ongoing fiscal year. Overall the oil sales in August 2015 posted a decline of three percent year-on-year. This was particularly driven by a drop in furnace oil sales by around 15 percent even amid falling furnace oil prices.

While high speed diesel saw a meager growth in consumption, the highest growth was achieved in petrol volumes; the jump in petrol sales has been over 42 percent year-on-year in August 2015 driven largely by falling product prices in the wake of lower international crude oil prices, diminishing spread between compressed natural gas (CNG) and petrol prices, and the ongoing curtailment of CNG in the country.

Similarly, imports of the major petroleum products followed the same trend; motor gasoline (petrol) imports expanded by 80 percent year-on-year, while that of HSD and furnace oil slimmed by 24 percent and 42 percent year-on-year, respectively. Overall, the major petroleum sales that include the three main POL products remained stagnant, while imports of the same dipped by 17 percent year-on-year.

A look at the first two months of FY16 together reveals that only the petrol volumes and imports have been on an upward journey in FY16 among the major petroleum products. However, the consumption of oil products seems to have picked up, i.e. August 2015 has been better than July 2015 in terms POL demand.

What route will petroleum consumption take in the coming months? Petrol demand in expected to remain elevated. Diesel volumes too are seen to take uplift due to increased usage in commercial transportation and agriculture post 2015 floods. The good news for oil marketing companies like PSO and APL is that the due to recent increase in gas tariffs, the reliance on furnace oil will increase for power generation, which will boost consumption of the petroleum product. A key highlight if the OMC world is the increasing presence of Hascol; the firm has witnessed a significant increase in volumes recently amid falling sales by the industry leaders.