Indian oil refiners shut for work before likely demand pickup
Indian oil NSE 0.87 % refiners are taking advantage of weak demand due to the virus resurgence to carry out maintenance in anticipation of a revival in fuel consumption in the coming months.
Bharat Petroleum NSE -0.31 % has lined up work at its plants across India, while Hindustan Petroleum Corp. is completing pending repairs and an expansion of its Mumbai refinery. There’s no set season for maintenance in India, although processors often do it around March and April.
Fuels sales plunged about 30 per cent in May from pre-virus levels in 2019 as a spike in infections forced people to stay at home and savaged consumption. That led to swelling fuel stockpiles at refineries and storage facilities, forcing plants to cut crude processing by about 15 per cent last month.
With a steady decline in Covid-19 infections from a peak in early May and a relaxation of restrictions on movement, refiners are expecting fuel demand to start improving. Consumption will be higher in June than last month and should recover to around 90 per cent of pre-virus levels in July, a BPCL executive said Monday. India’s economy is likely to see an improvement in activity due to an accelerated pace of vaccination from next quarter, according to UBS Securities.
New Delhi and Mumbai, India’s political and financial capitals and two major fuel demand centers, began to ease their lockdowns on Monday. Both cities have seen a sharp rise in traffic levels.
“As I was hurrying to head to the office today, I encountered a lot of traffic,” HPCL Chairman Mukesh Kumar Surana said in Mumbai on Monday. “That, for me, is a clear sign that demand will pick up as restrictions are relaxed further.”
The Economic Times 09-06-2021