S&P Global Platts cuts ’21 oil demand forecast by 9%

S&P Global Platts has cut India’s 2021 demand forecast for oil products by nine per cent to 400,000 barrels per day (bpd) now, as compared to 440,000 bpd estimated last month. The revision, S&P Global Platts said, was done because of the surge in Covid-19 cases across the country, which has triggered lockdowns.

“Lockdowns have been imposed in some pockets and provinces. Therefore, we have adjusted India’s total oil product demand growth for 2021 down to 400,000 bpd for the latest update, as against 440,000 bpd last month, pending further adjustment in the future depending on the COVID -19 situation,” said Lim Jit Yang, advisor for oil markets for Asia-pacific at Platts Analytics in a note.

The total petroleum demand in India, according to their estimate, had declined to 470,000 bpd in 2020, when the first wave pulled down petroleum consumption to the lowest level in nearly two decades. “Indian refiners have so far stayed away from slashing crude run rates sharply despite the surge in Covid-19 cases to record highs, but with a rise in regional lockdowns and its subsequent impact on mobility and industrial activity, analysts said they will be forced to scale back crude runs in anticipation of a slowdown in oil demand,” Platts said.

A silver lining, however, could be railways that still chugs along — transporting key essentials across the country. A CRISIL report suggests that the impact of the second wave on industrial activities has been small thus far, aided by movement of goods across the rail network.

“Railway freight movement of major inputs, such as coal, iron, and steel, has remained relatively steady. It recorded a slight decline towards the beginning of April (an annual feature as year-end activities saw an increase in volumes in March, and then dip in April), but has recovered since then. This indicates that on an overall level, the impact of the second Covid-19 wave on industrial activities thus far remains small,” wrote economists at CRISIL Ratings, in an April 26 note.