LAHORE - Oil consumption in March 2012 declined by 11 per cent YoY; led by fall in sales of Furnace Oil (FO) and Jet Fuel (JP). Encouragingly though, consumption posted an impressive recovery of 18 per cent MoM. It took cumulative 3Q offtake to 2.8 million tons versus 3.2 million tons in the preceding quarter, a decline of 10 per cent QoQ. However, it is contend a strong earnings outlook for marketing companies’ in 3Q on the back of hefty inventory gains and lower exchange losses.

Oil consumption in March 2012 clocked in at 1.6 million tons, a decline of 11 per cent YoY. Lower sales are mainly due to fall in consumption of FO (down 20 per centYoY) and JP (down 48 per centYoY) on the back of worsening of the circular debt situation and cutting off NATO supply routes, respectively. Nevertheless, Motor Gasoline (MOGAS) sales volumes increased by 20 per centYoY to 239k tons due to enhanced CNG load shedding in the country.

On a MoM basis, oil consumption posted an impressive recovery of 18 per cent. The improvement came in on the back of seasonal uptick in volumes of FO and High Speed Diesel (HSD).

While 3Q has proved to be a lean quarter for oil consumption (down 10 per cent QoQ), we contend an improved earnings outlook for marketing companies for the quarter. We believe hefty inventory gains (oil prices up 11 per cent) and lower exchange losses compared to 2Q (PKR depreciation of 0.8 per cent in 3Q vs. 2.8 per cent in 2Q), to lead the improvement in the bottomline of the OMCs.