India is on the brink of a V-shaped recovery after months of severe restrictions

India is on the brink of a V-shaped recovery after months of severe restrictions

- Indian tourists are hitting the roads and heading to the hills to escape a sweltering summer after months of severe restrictions due to a deadly Covid 19 wave, although the respite may be brief with a new outbreak looming.

The urge to break free following months spent cooped at home is driving up demand for gasoline, which climbed above pre-virus levels last month. Pictures across local media show empty highways and crowded markets in Himachal Pradesh, a scenic state in the Himalayas, while restaurants filling up again.

'India's gasoline demand is on the brink of a V-shaped recovery as movement restrictions have been lifted or eased in several states, said Senthil Kumaran, head of South Asia oil at industry consultant FGE. 'So far, the release of increased market demand has outweighed the impact of pent-up retail prices.

The recovery from the devastating outbreak that overwhelmed India's health care system earlier this year is currently one of the few bright spots for fuel demand in Asia, as China and Indonesia grapple to contain flare-ups. However, India is likely to see a rise in Covid 19 infections building up into a new wave that may peak in October, according to researchers. The exodus to the hills has prompted concerns at the highest levels of government

'Experts have repeatedly warned that there could be a massive spike in corona infections due to carelessness, negligence and overcrowding, Prime Minister Narendra Modi said during a meeting with chief ministers of India's northeastern states. Confirmed Covid - 19 cases in India ticked lower over the seven days ended August 1, after trending lower since mid-May, according to data compiled by Bloomberg. The Delta variant has led to a rapid increase in infections worldwide.

Not even record high pump prices discouraged Indian's from escaping their homes and FGE is predicting that the demand of motor fuel will continue rising the rest of the year. Consumption averaged 637,000 barrels a day in the second quarter and is expected to gain 12% from July to September, according to the industry consultant. However, diesel demand is still stagnating.

The preference for cars rather than public transport to prevent being infected is contributing to a drag on diesel. While sales are still below pre-virus levels, the nation's top fuel retailer sees them recovering from the Diwali festival in November. Diesel accounts for almost 40% of total petroleum production demand.

'While August is a lean month for diesel, we expect the festivals and winter harvesting to lift demand in the later months, said Mukesh Kumar Surana, chairman of state-run Hindustan Petroleum Corp. I expect diesel use to end the year at pre-virus levels or a percent lower.

FGE estimates that diesel demand will edge higher this quarter to 1.6 million barrels a day and 1.77 million barrels the following three months. The second quarter compares with 1.5 million barrels a day in the first quarter. The Indian Oil Corp. said: 'There is no let up in gasoline demand, said Shrikant Madhav Vaidya, chairman of the Indian Oil Corp. If we don't see another wave, God forbid, we should get back to 100% capacity utilization of refineries by Diwali and diesel consumption would also reach pre-Covid levels.