(Bloomberg) -- India reported its first yearly increase in petroleum consumption since February, proving the fuel-guzzling nation’s demand is back despite rising coronavirus cases.
Total petroleum demand rose 2.7% year-on-year in October, reaching 17.8 million tons, according to provisional data published by the oil ministry’s Petroleum Planning & Analysis Cell. Road fuels reached pre-pandemic levels, but it was demand for naphtha that really soared. Consumption of the petrochemical industry feedstock surged 15%.
The recovery by the world’s third-biggest crude consumer could help to consolidate this week’s rally in oil prices after a Covid-19 vaccine breakthrough. A strict lockdown in India in late March had crushed fuel demand, resulting in a sharp cutback in crude processing and operations at petrochemical plants.
Indian refineries have been processing flat out since the first week of November, and the country’s market for refined products should be “near normal” by the first quarter of next year, Indian Oil Corp. Chairman Shrikant Madhav Vaidya said at the Adipec conference on Thursday.
The world’s second-most populous nation went into its month-long annual festivals from middle of October. This is the peak demand season for everything from white goods to cars, and a busy time for diesel-guzzling trucks making deliveries.
Petrochemical plants, which use naphtha to ultimately make plastics and automobiles and consumer durables, started ramping up after months of idling as demand started picking up.
Some of Indian Oil’s petrochemical plants, which slashed operations by half during July-September on lower offtake, have ramped up processing use to as much as 85% in October, Sandeep Kumar Gupta, finance director, said on a Nov. 2 call with analysts.
Global oil benchmark Brent crude dipped below $43 a barrel on Friday in Asia but is still up more than 8% for the week.