Sale of petroleum products inches up 4pc, signals some stability

Sale of total petroleum products in Pakistan clocked in at 1.15 million tons in March, an increase of 4% year-onyear. “The increase in YoY oil sales comes after 21 months,” said Topline Securities in a note on Tuesday. “Improvement in oil sales signals some stability in economic activities,” the brokerage house added.

However, furnace-oil (FO) sales nosedived by 48% YoY in March 2024, amounting to 0.04 million tons. Sale of MS (petrol) increased 3% YoY, clocking in at 0.57 million tons in March. Volume of High-Speed Diesel (HSD) jumped by 17% YoY, settling at 0.46 million tons in March 2024.

On a month-on-month (MoM) basis, POL products offtake witnessed an increase of 3% during March. Volumes of MS inched improved 5%, whereas HSD offtake increased by 4%. “MoM jump in OMC’s sales is due to a lower base amid fewer days in February 2024 and expectations of an increase in fuel prices,” said Topline.

Meanwhile, FO sales registered a decline of 11% MoM. During the first nine months of FY24, sales of total petroleum products dropped by 11% YoY to 11.34 million tons compared to 12.80 million tons in the same period last year. Product-wise data showed a decline in all categories; the offtake of MS, HSD and FO settled at 5.30 million tons, 4.58 million tons and 0.84 million tons, respectively, reflecting a decline of 5%, 5% and 53%.

Company-wise, PSO’s offtake depicted an increase of 11% YoY in March 2024, which was majorly driven by an increase in sales of MS and HSD, which improved 13% and 15%, respectively. Meanwhile, sales of FO registered a decline of 66% YoY. On the other hand, sales of Attock Petroleum Limited (APL) and Hascol Petroleum Limited (HASCOL) decreased by 9% and 41% YoY, respectively, amid a fall in sales of all products.

However, Shell Petroleum Limited (SHEL) sales witnessed an increase of 6% YoY.

The oil sales by the oil marketing companies during

February 2024 plummeted by 8 percent year-on-year. The decline in volumetric sales by the oil marketing sector has been in line with the ongoing trend months despite some respite in economic downturn in the 8 months of FY24.

All three key petroleum products witnessed a decline in volumes during the month. Furnace oil witnessed a sharp decline of around 32 percent year-on-year, while highspeed diesel and motor spirit declined by 7 percent and one percent, year-on-year, respectively. Volumes during February were down due to rising petroleum prices and significant crunch in furnace oil volumes during the winter months when demand for power declines. Overall, the OMC volumes in 8MFY24 were down by 13 percent yearon-year led by 52 percent decline in furnace oil volumes on the back of low reliance on fuel for power generation.

Where is the petroleum production consumption headed? While on one hand, there are hopes of some economic recovery amid upcoming Kharif seasonal sowing and anticipations for lower inflation that can lead to some growth in volumes; there are strong recommendations by the Fund for the imposition of 18 percent sales tax on petroleum products that would undermine any growth prospects. Prices were raised in February and now another price increase is expected in March upon the fortnightly revision. This will also continue to impact consumption of petroleum products in the coming months. Meanwhile, furnace oil volumes might see some rebound as summer season approaches.