India's fuel demand grows 10.5% in November, hits near two-year high

India's fuel demand grew by 10.5% in November from a year earlier, its fastest pace since January 2018, driven by higher consumption of transport fuels gasoil and gasoline, and cooking gas.

Consumption of refined fuels, a proxy for oil demand in Asia's third largest economy, totalled 18.77 million tonnes in the month, preliminary data from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry showed on Wednesday.

The International Energy Agency in a report released on Thursday forecast India's oil demand growth in 2019 and 2020 to stay below levels seen between 2015 and 2018.

"Oil demand growth in 2020 is likely to be higher than in 2019, assuming that economic growth accelerates, but it will remain below the 200,000 bpd levels reached in 2015-18," the IEA said.

 

The Paris-based think tank estimates that India's oil demand will rise by 2.8% to 5 million barrels per day in 2019 and by 3.6% to 5.18 million bpd in 2020.

Diesel consumption, which accounts for about two-fifths of India's overall refined fuel demand, reversed the declining trend of the previous three months and rose by 8.8% to 7.55 million tonnes in November from a year earlier, also its highest rate since January 2018, the data from PPAC showed.Although fuel consumption normally reflects industrial activity in India, industry officials linked the annual increase in November to a low base last year, when sales of the fuel plunged during the month due to the late falling of festivals.

"During festival season road and other infrastructure related construction work temporarily comes to a halt, and also movement of transportation vehicles - mainly trucks - get restricted," an official at one of the state refiners told Reuters.

"Last year festival season was in November when diesel sales growth was negative while this year festivals were in October, so we are seeing high growth in November," he added.

For most of this fiscal year beginning April, India's diesel sales have remained subdued due to various factors including a prolonged monsoon season and softening industrial activity. Analysts expect the trend to continue until the second half of 2020.

Between April and November, diesel consumption grew by about 1% from the same period a year ago, the data showed. For an explainer on India's slowing diesel demand double click

Sales of gasoline, or petrol, rose 9% from a year earlier to 2.53 million tonnes. Cooking gas or liquefied petroleum gas (LPG) sales increased 23.4% to 2.27 million tonnes and sales of naphtha rose 2.5% to 1.25 million tonnes in November.

Sales of bitumen, used for making roads, were 12% higher, while fuel oil use dipped 2% in November, the data showed.