India’s September fuel demand steady, rising oil prices cloud outlook – ET Auto

Petrol sales slipped 3.5% from August, but climbed 6% year-on-year and 9.5% from September 2019.

India’s September fuel consumption crawled higher month-on-month as economic activity continued to ramp up, government data showed on Wednesday, but soaring global oil prices could stall a recovery in the world’s third-biggest oil importer and consumer.

Fuel consumption, a proxy for oil demand, totalled 15.92 million tonnes last month, up slightly from August and 5.2% higher than in September 2020, data on the Petroleum Planning and Analysis Cell (PPAC).

But overall, consumption was still 1.7% below September 2019.

Monsoon rains and shipping constraints had prompted a dip in consumption in August.

Petrol sales slipped 3.5% from August, but climbed 6% year-on-year and 9.5% from September 2019.

Increased personal mobility drove petrol demand, “which has clearly moved above pre-COVID levels”, said Hetal Gandhi, director at CRISIL Research.

Consumption of diesel, which usual accounts for about 40% of refined fuel sales, also eased 1.7% month-on-month to 5.51 million tonnes, and was 5.6% lower compared with September 2019.

But diesel sales rose slightly from the same period last year.

“While overall diesel demand still remains below pre-COVID levels, a recovery is in line with a rush ahead of the festive season,” Gandhi added.

However, soaring global crude prices could slow the rebound, with India signalling late last month that elevated global oil prices could also speed up the transition to alternative energy sources. [O/R]

“I see a gradual recovery in demand from here, but high oil prices could pose a serious problem for Indian consumers,” Refinitiv analyst Ehsan Ul Haq said.

Versus a year ago, sales of liquefied petroleum gas (LPG) increased 4.5% to 2.36 million tonnes, while naphtha sales fell 0.5% to 1.11 million tonnes.

Sales of bitumen, used for making roads, were up 7.2%, while fuel oil use rose 21%.

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In the national capital, petrol continues to be sold at Rs 104.44 per litre and diesel at Rs 93.17 per litre. While in Mumbai, where petrol became costlier by 29 paise per litre on Monday, the retail rates remain static at Rs 110.41, the highest across all the four metro cities. Diesel also costs Rs 101.03 for one litre in Mumbai.

The Organization of the Petroleum Exporting Countries (OPEC) now expects oil demand to grow by 5.82 million barrels per day, down from 5.96 million bpd in its previous forecast, saying that the downward revision was mainly driven by data for the first three quarters of the year.

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