India's fuel consumption fell for the second month in a row in February to its lowest since September last year as record-high retail prices continued to stonewall a demand recovery for the world's third-biggest oil importer and consumer. Consumption of fuel, a proxy for oil demand, fell 4.9% to 17.2 million tonnes year-on-year in February, data from the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Petroleum & Natural Gas showed on Thursday.
On a monthly basis, demand slipped by 4.6%. "Prices have to come down or coronavirus cases should reduce before we see a real recovery, as some people are still reluctant to travel" said Refinitiv analyst Ehsan Ul Haq.
In January, India had registered its first month-on-month decline in five months. Gasoline and gasoil prices in India have risen to record highs, mirroring global markets. Earlier this month, India said a decision by major producers to extend oil output cuts could derail any consumption led-recovery in some countries since it keeps global prices elevated.
"India is doing what it can to reduce the impact of the pandemic, but it still needs some help from OPEC to stabilise prices. OPEC should not kill the goose that lays the golden egg", Ul Haq added. Diesel consumption, a key parameter linked to economic growth and which accounts for about 40% of overall refined fuel sales in India, fell 3.8% to 6.55 million tonnes from the previous month, and also declined 8.5% year-on-year.
Gasoline, or petrol, sales fell 6.5% to 2.44 million tonnes in February and by about 3% from a year earlier. Sales of cooking gas, or liquefied petroleum gas, were 7.6% higher than a year earlier at 2.27 million tonnes, while naphtha sales remained unchanged at 1.22 million tonnes.
Sales of bitumen, used for making roads, were down about 11.1%, while fuel oil decreased by about 10% last month.