Furnace oil sales jump 14%
Overall, oil sales rise 10% to 2.43 million tons in May 2017
PHOTO: REUTERS
KARACHI:
Sales of fuel oil accelerated 10% on a month-on-month basis to 2.43 million tons in May 2017 primarily due to increased demand for furnace oil from power producers in summer months.
“Furnace oil sales recorded the biggest jump of 14% month-on-month to 0.86 million tons in May among major products. The growth can be attributable to the seasonal surge due to the arrival of summer season,” Arif Habib Limited’s analyst Waleed Rahmani said in a note to clients.
With a sharp rise in electricity demand with the onset of warmer weather, the independent power producers increased their capacity utilisation. As their primary fuel is furnace oil, they supported its sales growth.
On the other hand, sales of instant cash-generating products like motor gasoline (petrol) and high-speed diesel recorded growth of 8% and 9% respectively on a month-on-month basis. “With no change in retail prices during May 2017, the upturn in demand for these products is also attributable to the commencement of summer season,” the analyst said.
Sales slowdown
Topline Securities, while highlighting a 3% decline in oil sales on a year-on-year basis in May 2017, said the drop came in the wake of uptrend in oil prices in recent months.
“Since Dec 2016, petrol and diesel prices have surged around 10%, which slowed down sales growth of OMCs (oil marketing companies). Furthermore, a slowdown in furnace oil sales is also restraining the OMCs’ sales growth as new power plants are based on coal,” it said.
In 11 months of the outgoing fiscal year 2016-17, oil sales rose 12% to 23.8 million tons, higher than the past three-year average growth of 7% because of low oil prices until recently, it said. “We now anticipate oil sales to come in at 26.1 million tons, 4% lower than our initial estimates as petrol and diesel sales have remained lower than anticipation due to uptick in prices over the last few months,” it added.
Published in The Express Tribune, June 3rd, 2017.
Sales of fuel oil accelerated 10% on a month-on-month basis to 2.43 million tons in May 2017 primarily due to increased demand for furnace oil from power producers in summer months.
“Furnace oil sales recorded the biggest jump of 14% month-on-month to 0.86 million tons in May among major products. The growth can be attributable to the seasonal surge due to the arrival of summer season,” Arif Habib Limited’s analyst Waleed Rahmani said in a note to clients.
With a sharp rise in electricity demand with the onset of warmer weather, the independent power producers increased their capacity utilisation. As their primary fuel is furnace oil, they supported its sales growth.
On the other hand, sales of instant cash-generating products like motor gasoline (petrol) and high-speed diesel recorded growth of 8% and 9% respectively on a month-on-month basis. “With no change in retail prices during May 2017, the upturn in demand for these products is also attributable to the commencement of summer season,” the analyst said.
Sales slowdown
Topline Securities, while highlighting a 3% decline in oil sales on a year-on-year basis in May 2017, said the drop came in the wake of uptrend in oil prices in recent months.
“Since Dec 2016, petrol and diesel prices have surged around 10%, which slowed down sales growth of OMCs (oil marketing companies). Furthermore, a slowdown in furnace oil sales is also restraining the OMCs’ sales growth as new power plants are based on coal,” it said.
In 11 months of the outgoing fiscal year 2016-17, oil sales rose 12% to 23.8 million tons, higher than the past three-year average growth of 7% because of low oil prices until recently, it said. “We now anticipate oil sales to come in at 26.1 million tons, 4% lower than our initial estimates as petrol and diesel sales have remained lower than anticipation due to uptick in prices over the last few months,” it added.
Published in The Express Tribune, June 3rd, 2017.