India’s Oil Demand Nearing Pre-Covid Levels

India’s petroleum consumption is nearing the levels seen prior to the pandemic.

Crude imports and throughput—the volume of oil that goes for refining—rose for the first time in this financial year in December, CARE Ratings Ltd. said in a report. The industry’s refinery utilisation rose to 101%, also the highest this fiscal.

While overall consumption of petroleum products at 18.6 million metric tonnes was 1.8% lower than a year earlier, it was the highest since February 2020, separate data by the Petroleum Planning and Analysis Cell showed. Production was also 3.6% lower than a year earlier but the pace of contraction was the lowest for the year.

“The throughput is increasing as the economy is slowing reflating, and certain products are gaining traction,” said Urvisha Jagasheth, research analyst at CARE told BQ over phone. Consumption increased for LPG, petrol, bitumen, lubes, and greases and LDO in December, she said.

That comes as demand for everything from cars to consumer goods started recovering after India started easing the Covid-19 lockdown. Vaccine rollouts also triggered optimism about a quicker-than-expected rebound in the economy that’s on track to contract first time in decades.

The opening up of the global economy, output cuts by OPEC in the previous months, fall in U.S. oil production and inventory helped the recovery in oil prices in recent months. Brent crude has gained 8.9% in January so far.

While crude exports also still 30.3% lower than a year earlier in December, they rose for the second straight month sequentially.

Natural gas production fell both sequentially and over a year earlier after two straight months of growth, indicating pent-up consumption of the commodity is waning. Imports also rose by just 0.9% in December.

CARE expects gross production of domestic natural gas to fall by 11.1% in FY21 due to low gas prices.