The oil marketing segment has been hit hard by weaker volumes amid escalating prices, shrinking margins, weaker currency and economic slowdown. FY24 has shown some fluctuations in the trend - The year-on-year decline in petroleum consumption in July 2023 was due to weaker volumes of Furnace Oil that fell by almost 60 percent year-on-year, while the retail products like Motor Spirit and High-Speed Diesel witnessed a year-on-year growth in July 2023. The same trend continued in August as OMC volumes for the month witnessed an eight percent year-on-year fall with Furnace Oil declining by 64 percent year-on-year – leading the fall. On the other hand, HSD and MS incurred an uptick of 11 percent and 13 percent year-on-year respectively.
The month-on-month growth in volumes for August was also positive at 4 percent with MS and HSD inclining by two percent and 11 percent, respectively. FO continued its month-on-month fall as well with 18 percent. Overall, the 2MFY24 OMC sales volumes were down by 7 percent year-on-year to to 2.8 million tons as compared to 3 million tons in 2MFY23 with HSD up by 11 percent year-on-year, MS up by 8 percent, and FO down by 61 percent year-on-year.
Market sources reveal that the uptick in volumes in the recent couple of months has been due to pre buying of products in anticipation of further increase in prices, which right so was witnessed on September 01, 2023 again. Price of petrol has increased from the average price for June of Rs253 to Rs311 on September 01, 2023. HSD average price of Rs262 for June 2023 is up to Rs 305.36 for September 2023 so far. Other factors for August sales also include the resumption of schools after the summer vacation, and weaker monsoon as compared to FY23. On the other hand, the decline in FO volumetric sales has been due to continued weakness in the economy, inflation, currency depreciation and lower consumption of the black fuel in power generation.
At the current pace, the oil consumption is continuingto remain weak amid the expectations of price more increase for retail fuels. Demand is likely to remain sluggish amid high inflation, while the recent uptick has been primarily witnessed due to hoarding in a high price environment.