Oil demand rises most since note ban

Total fuel consumption rose 5.4 % to 17.79 million tonnes in May

India’s oil demand bounced back in May, led by the highest growth in gasoline consumption in nine months and the fastest increase in diesel usage since November.

Total fuel consumption rose 5.4 per cent to 17.79 million tonnes in May, the most in six months, according to the oil ministry’s Petroleum Planning and Analysis Cell. Demand for diesel, which accounts for about 40 per cent of total sales, expanded 8 per cent to 7.5 million tonnes. Gasoline offtake climbed 15 per cent to 2.4 million tonnes, the fastest since August.

Oil consumption plunged 5.9 per cent in January, the most in 13 years, after Prime Minister Narendra Modi’s shock clampdown on high-value currency notes in November. Demand fell 3.1 per cent in February and 0.7 per cent in March before rebounding in April.

“Fuel demand, unusually subdued in the last quarter of the fiscal due to demonetisation, seems to be coming back to normal levels,” said K Ravichandran, senior vice-president and group head, corporate ratings at credit assessor ICRA. “Passenger vehicle sales continue to be good and that explains the recovery.”

The International Energy Agency, which expects India to be the fastest-growing oil consumer through 2040, trimmed the country’s demand growth estimate for 2017 by about 15 per cent last month following the demonetisation. 

“With the onset of the monsoon, we expect demand to pick up further in the coming months,” Mukesh Kumar Surana, chairman of Hindustan Petroleum Corp, said.