The oil sales by the oil marketing companies during February 2024 plummeted by 8 percent year-on-year. The decline in volumetric sales by the oil marketing sector has been in line with the ongoing trend months despite some respite in economic downturn in the 8 months of FY24. All three key petroleum products witnessed a decline in volumes during the month. Furnace oil witnessed a sharp decline of around 32 percent year-on-year, while high-speed diesel and motor spirit declined by 7 percent and one percent, year-on-year, respectively. Volumes during February were down due to rising petroleum prices and significant crunch in furnace oil volumes during the winter months when demand for power declines.

Overall, the OMC volumes in 8MFY24 were down by 13 percent year-on-year led by 52 percent decline in furnace oil volumes on the back of low reliance on fuel for power generation.

Where is the petroleum production consumption headed? While on one hand, there are hopes of some economic recovery amid upcoming Kharif seasonal sowing and anticipations for lower inflation that can lead to some growth in volumes; there are strong recommendations by the Fund for the imposition of 18 percent sales tax on petroleum products that would undermine any growth prospects. Prices were raised in February and now another price increase is expected in March upon the fortnightly revision. This will also continue to impact consumption of petroleum products in the coming months. Meanwhile, furnace oil volumes might see some rebound as summer season approaches.