Coronavirus impact: Fuel demand nearly halves in April as lockdown, travel curbs erode economic activity

Fuel demand dipped 45.8 percent in April from a year earlier, as a nationwide lockdown and travel curbs to combat the spread of novel coronavirus eroded economic activity.

Consumption of fuel, a proxy for oil demand, totalled 9.93 million tonnes-its lowest since 2007, government data showed on Saturday.

State fuel retailers in sold 50 percent less refined fuel in the first two weeks of April than the same time a year earlier as the country came to a standstill due to the lockdown that was put in place on 24 March.

The government last week extended the lockdown until 17 May, with some relaxations in lower-risk areas, although travel by air, rail and metro and inter-state movement of people by road was still banned.

The International Energy Agency (IEA) in its latest report said India’s annual fuel consumption will decline 5.6% in 2020 compared with growth of 2.4 percent forecast in its March report.

Consumption of diesel, which is widely used for transportation as well as for irrigation needs, was down about 55.6 percent year-over-year at 3.25 million tonnes.

Sales of gasoline, or petrol, dropped by 60.6 percent from a year earlier to 0.97 million tonnes.

Cooking gas or liquefied petroleum gas (LPG) sales rose about 12.1 percent to 2.13 million tonnes, while naphtha sales fell 9.5 percent to 0.86 million tonnes.

State-retailers sold 21 percent more LPG in the first fortnight of April from a year earlier. The government is providing free cooking gas cylinders to the poor for three months to June to help them weather the impact of the lockdown.

Sales of bitumen, used for making roads, slumped 71 percent, while fuel oil use dipped 40 percent in April.

However, the country’s fuel demand is set to recover with easing restrictions on industrial activity and transport in areas that have contained the spread of coronavirus, oil minister Dharmendra Pradhan said earlier this week.