India's Sept fuel demand rises at fastest pace in a decade

Fuel consumption up 15.1% y-o-y, the biggest rise since August 2005

India's fuel demand in September rose at the fastest pace in more than a decade, providing further evidence of a pick up in industrial activity in Asia's third-largest economy.

Fuel consumption, a proxy for oil demand, surged 15.1% in September from the same month a year ago, the biggest rise since August 2005, according to data from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry.

The fuel consumption figures come days after data showing industrial production expanded at its fastest pace in nearly three years, helped by a surge in capital investment.

Fuel sales in the world's fourth-largest oil consumer totalled 14.70 million tonnes last month, the data showed, led by robust sales of diesel and petrol.

Diesel consumption, which accounts for about 40% of refined fuels used in India, rose 20.1% to 5.89 million tonnes, the strongest rise since August 2005.

Weak monsoon rains spurred demand for diesel-fuelled generators used to power pumps for wells, as roughly half of India's farmland lacks irrigation.

The South Asian nation suffered its first back-to-back drought in three decades this year, with the rainfall deficit of as high as 47% in some regions.

Construction activity also likely rose due to the drier conditions with the data showing consumption of bitumen, used for making roads, up by 51.6%, while fuel oil usage was up 7.1% in September.

Sales of petrol, widely used for transportation, climbed 25.4% to 1.9 million tonnes from a year earlier, the sharpest rise since May 2013, as demand for passenger vehicles rose in the month.

Cooking gas sales increased 4.1% to 1.6 million tonnes, while naphtha sales rose 38.4% to 1.2 million tonnes.