India's gasoline demand optimism prevails despite omicron disruption – S&P Global

February 5, 2022

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India’s gasoline demand will likely continue to recover this year on improving economic activity, but the upside is expected to be partially offset by the continued threat of COVID-19 infections in the country, which has already been inflicted by a third wave recently due to the omicron variant.
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“In India, gasoline demand has rebounded to pre COVID-19 levels, but the threat of omicron has put a dent in the overall recovery,” said a Singapore-based trader Feb. 4.
“Still, gasoline demand is on the recovery track. The peak of the virus is supposedly over and looking ahead, we are expecting higher gasoline consumption as mobility picks up,” the trader added.
The number of cases reported in the country has declined, government-run Press Information Bureau said on its Twitter account Feb. 3.
As of Feb. 3, there were about 1.53 million active cases, it said, adding that India reported a peak of 347,254 cases Jan. 21, which is less than the previous peak of 414,188.
Driving activity, a proxy for gasoline demand, was recorded at 77.31% above baseline levels on Feb. 1, holding firm from the January average of 77.46% above baseline levels, Apple mobility data showed.
This also comes as several states have eased restrictions.
Delhi, for instance, has lifted its weekend curfew restrictions and eased the odd-even market curtailments while also allowing movie halls and restaurants to operate at limited capacity.
“India’s gasoline demand had already recovered back to above 2019’s levels last year,” JY Lim, advisor oil markets at S&P Global Platts Analytics, said Feb. 3.
“The resurgence of COVID-19 in the country is expected to slow demand in Q1, but we still see growth for the whole of 2022 as the situation starts to improve. In fact, mobility seems to be picking up again in the latter part of January as daily infections started to ease,” Lim said.
Platts Analytics expects India’s gasoline demand to grow about 5% in 2022 after rising 12% in 2021, he said.

The forecast follows strong demand seen in December 2021 as well.
India’s gasoline consumption rose 6.44% month on month to a record high 2.82 million mt in December 2021, and was up 4.08% year on year, showed Petroleum Planning and Analysis Cell data in January.
Domestic gasoline consumption had fallen 3.84% to 2.65 million mt in November 2021 after touching the previous record high at 2.75 million mt in October, the PPAC data showed.
Improved economic activity is also set to boost gasoline demand. Indian Finance Minister Nirmala Sitharaman said Feb. 1 the country’s economic growth is expected at 9.27% in the fiscal year 2022-23, reflecting a sharp rebound in the economy, with plans also on the anvil to expand the National Highways network, local media reported. India’s budget fiscal year runs from April to March.

“Refinery runs are still high at the state-run refiners, prompted by strong gasoline cracks … the country is self-sufficient; hence we see excess barrels exported out,” said another Singapore-based trader.
The average run rate for all categories of refineries in India dipped to 101% in December 2021, compared with 105% in November, according to the latest survey of the oil ministry, primarily on maintenance works at some refineries.
In December, state-run refineries recorded a 103% run rate compared with 100% in December 2020 and 107% in November 2021.
Meanwhile, India’s gasoline exports rose 32.80% on the month to a more-than-two-year high of 1.374 million mt in December 2021, showed PPAC data released in the week started Jan. 30.
The country’s gasoline exports were last higher at 1.377 million mt in May 2019, the data showed.
Reflecting the firmer sentiment, the front-month FOB Singapore 92 RON gasoline crack against Brent swaps widened to $13.67/b at the close of Asian trade Feb. 3, up 14.68% from the $11.92/b assessed at the Asian close Jan. 31, S&P Global Platts data showed.

On the physical front, the FOB Singapore 92 RON gasoline crack against the front-month ICE Brent crude futures contract also widened to $13.86/b at the close of Asian trade Feb. 3, strengthening 22.87% from the $11.28/b assessed at the close of Asian trade Jan. 31.
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