India's refined fuel consumption in July slipped from June, according to preliminary industry data, indicating slower industrial activity as high retail prices, floods and renewed coronavirus lockdowns in parts of the country dented demand.
Local fuel sales - a proxy for oil demand - plunged to historic lows in April when India imposed a country-wide lockdown.
State-refiners' diesel sales, which account for two-fifth of overall refined fuel sales in India, fell by 13 per cent to 4.85 million tonnes in July from the previous month, and by about 21 per cent from a year earlier, according to data compiled by Indian Oil Corp (IOC).
State companies, IOC, Hindustan Petroleum Corp and Bharat Petroleum, own about 90 per cent of India's retail fuel outlets.
Falling local sales and subdued refining margins have forced refiners to curtail crude processing. IOC, the country's top refiner, doesn't see fuel sales recovering to pre-Covid-19 level in the near future.
Local fuel demand had gathered pace from May when India, the world's third-biggest oil importer and consumer, partly eased lockdown to bolster its sagging economy.
But a spike in domestic coronavirus infections has led to renewed imposition of lockdowns and addition of containment zones in several states.
Also, floods caused by rains have displaced and affected millions of people in some states and hit industrial and construction activity in the country.
Petrol sales by state companies fell by 1 per cent to 2.03 million tonnes in July from June, and by about 11.5 per cent from a year earlier, the data showed.
State retailers sold 10 per cent more liquefied petroleum gas (LPG) in July from June at about 2.275 million tonnes and posted a growth of 3.5 per cent from a year ago.
Jet fuel sales in July rose 4 per cent from June to about 218,000, but fell 65 per cent from a year ago as curbs on air travel continued.