Driven by drop in petrol and diesel prices, fuel demand rises 4% in Oct

India's fuel demand rose by 4 per cent in October as a drop in prices propelled a rise in petrol and diesel consumption.

Fuel consumption in October totalled 17.99 million tonnes (MT) as compared to 17.3 MT in the same month last year, data from the Petroleum Planning and Analysis Cell (PPAC) of the Oil Ministry showed.

When fuel prices started to rise on the back of a spurt in international oil rates and depreciation in rupee value against the US dollar in August, demand marginally dipped by 0.3 per cent to 16.5 MT. In the following month, when petrol and diesel prices continued their upward trend, consumption rose by just 1 per cent to 16.51 MT.

However, rates have been on the decline in October as the government cut excise duty by Rs 1.50 a litre and asked oil firms to subsidise fuel by another Re 1 a litre, which many states matched with equivalent cuts in sales tax (VAT), and international oil prices softened.

In July, fuel demand had risen by 6.3 per cent to 16.99 MT, according to PPAC data.

During October, petrol sales were up 4.6 per cent to 2.33 MT while diesel consumption was up 6.7 per cent to 6.98 MT.

Petrol price had touched an all-time high of Rs 84 a litre in Delhi on October 4 but has since declined to Rs 77.28 per litre on Thursday. Diesel, which had touched a record high of Rs 75.45, is now priced at Rs 72.09 per litre in Delhi.

During October, aviation turbine fuel (ATF) sales were up 9 per cent to 6,89,000 tonnes.

With the government pushing for use of cleaner liquefied petroleum gas (LPG) as cooking fuel by giving free connections to poor women, cooking gas (LPG) consumption was up 4.8 per cent at 2.06 million tonnes.

The result of LPG push was a 7.4 per cent drop in kerosene usage at 2,88,000 tonnes in October when compared to the year-ago period.

Naphtha sales were up 4.6 per cent at 1.23 MT, while consumption of petroleum coke dropped 11 per cent to 2.04 MT.