Indian fuel demand rises in March to highest since Dec 2019

Anjishnu Mondal
·2 min read
FILE PHOTO: A worker holds a nozzle to pump petrol into a vehicle at a fuel station in Mumbai
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By Anjishnu Mondal

(Reuters) - India's fuel consumption rose in March for the first time in three months, to its highest since December 2019, as economic activity gradually picked up after a coronavirus-induced slowdown.

Consumption of fuel, a proxy for oil demand, rose 17.9% to 18.8 million tonnes year-on-year in March, data from the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Petroleum & Natural Gas showed on Friday.

On a monthly basis, demand rose by 8.7% from February, when it fell to a five-month low.

"Car sales are rising and people are travelling more," while oil refiners are also upbeat about demand, said Refinitiv analyst Ehsan Ul Haq.

Preliminary industry data earlier this month pointed to an increase in Indian state retailers' gasoline and gasoil sales in March from the low base of last year when a nationwide lockdown hit consumption.

"We must not forget the comparison with March 2020, which was a difficult month for Indian demand, with April 2020 even worse. Hence, year-on-year recovery is expected to continue in the future as well," Ul Haq added.

The International Monetary Fund on Tuesday projected India's economy would grow by 12.5% in 2021.

But clouding the outlook, several Indian states have struggled to contain a second surge in COVID-19 infections.

Diesel consumption, a key parameter linked to economic growth and which accounts for about 40% of overall refined fuel sales in India, rose 10% in March from February to 7.22 million tonnes, and also rose 27.6% year-on-year.

Gasoline, or petrol, sales rose 11.4% to 2.74 million tonnes in March and by about 27% from a year earlier.

Sales of cooking gas, or liquefied petroleum gas, were 1.3% lower than a year earlier at 2.26 million tonnes, while naphtha rose by 3.8% to 1.36 million tonnes.

Sales of bitumen, used for making roads, were about 45.2% higher than a year earlier, while fuel oil rose by over 12.8% last month.

(Reporting by Anjishnu Mondal in Bengaluru; Editing by Susan Fenton)