Oil refineries on full steam as demand for fuels rises

Three State-run processors including Indian Oil Corp., the nation's top refiner, are currently operating at close to 100 per cent capacity or higher, according to people with knowledge of the matter. Behind the recovery is strong demand for gasoline and liquefied petroleum gas as many opt to drive their own cars over taking public transport and cook at home to avoid restaurants.

The situation in the world's No. 2 oil market follows a full rebound in top consumer China, and underscores how Asian markets are leading crude's rally even as vaccines offer hope for a wider revival. The uneven nature of India's recovery shares similarities with its neighbor's revival - gasoline use in both nations spiked when people returned to work - while demand for diesel in the still-flagging South Asian economy lagged that of China.

"As we get closer to the Covid-19 vaccine rollout, the fundamentals of the economy being strong, we see a rapid V-shaped recovery in the overall consumption of petroleum products," Indian Oil chairman Shrikant Madhav Vaidya said in a statement.

In the first-half of this month, Indian gasoline and LPG sales were 10 per cent higher than the same time last year, according to preliminary data compiled by the nation's top three fuel retailers. The sale of diesel, the country's most popular fuel, lagged year-ago figures by 5 per cent while use of aviation fuel was halved. The thrumming refineries are a stark contrast to the situation in July when lockdowns destroyed demand and prompted a diversion of excess fuels to onshore tanks, filling them to the brim.

Unlike China, where the demand recovery followed a near-complete eradication of Covid-19, India's plants are returning to full capacity before the disease is gone. While daily cases are declining, restrictions on public transport and travel continue.