India's crude oil import bill fell to a third in the first four months of the current fiscal after international oil rates nosedived on demand evaporating due to the outbreak of coronavirus pandemic and ensuing lockdowns, Petroleum Minister Dharmendra Pradhan said on Monday.
India spent USD 12.4 billion on importing 57.2 million tonnes of crude oil during April-July as opposed to USD 36.2 billion expenditure on import of 74.9 million tonnes in the same period a year back, he said in a written reply to a question in the Lok Sabha.
The basket of crude oil India imports had averaged USD 64.31 per barrel in January 2020, which fell to USD 33.36 a barrel in March when the pandemic spread globally.
In April, it plunged to a two-decade low of USD 19.90 per barrel as lockdowns globally shuttered economic activity, sending demand crashing down.
Pradhan said rates began to recover in May with Indian basket averaging USD 30.60 per barrel. This rose to USD 40.62 in June, USD 43.35 in July, and USD 44.19 in August.
India is 85 per cent dependent on imported crude oil to meet its fuel needs.
A nationwide lockdown almost halved India's fuel consumption to 9.89 million tonnes in April.
"COVID-19 pandemic has resulted in unprecedented fall in demand which in-turn has reduced revenue consequent to lockdown imposed in the country," he said.
With relaxations in restrictions, demand rose to 14.63 million tonnes in May and to 16.25 million tonnes in June. But the imposition of local lockdown by states saw demand fall to 15.68 million tonnes in July, he said.
India used the low oil prices in April to fill all its storages. It spent just USD 3.1 billion on the import of 16.6 million tonnes of crude oil in April. This compares with USD 9.7 billion spent on the import of 19.7 million tonnes of crude oil in April 2019.
The May crude oil import bill was lowest in many years at USD 2.3 billion. It was at USD 9.5 billion in May 2019.
Pradhan said April witnessed West Texas Intermediate (WTI) crude futures on the New York Mercantile Exchange dive into negative territory for the first time ever.
"WTI May 2020 futures contract which was due to expire on that day, ended at a negative USD 37.63 a barrel" on April 20, he said.
When an oil contract expires in New York Mercantile Exchange (NYMEX), the buyer of the futures contract has to take possession of 1,000 barrels of oil for every contract they own, delivered to Cushing.
"However, there was a fall in oil product demand due to COVID-19, which led to filling up of oil storage at all places. Due to a lack of storage at Cushing, the buyers wanted to sell out of those positions.
"However, there were not many buyers as storage was very limited and it led to people selling it off even at negative prices," he said.
But this negative price was only for one day and the next day June WTI contract, was trading around USD 20 a barrel, he added.