India’s fuel demand falls in July as monsoon sets in

Diesel, the most widely used fuel in the country, saw consumption drop 13.7 per cent during July 1-15

NEW DELHI: India’s demand for petrol and diesel fell in the first half of July over the previous month as the onset of monsoon chipped away consumption in some sectors and restricted mobility, preliminary industry data showed on Sunday.

Diesel, the most widely used fuel in the country, saw consumption drop 13.7 per cent during July 1-15 to 3.16 million tonnes from 3.67 million tonnes demand in the same period of the previous month.

The arrival and intensity of monsoon weighs heavily on diesel demand in the country and consumption traditionally is lower in July-September than in April-June. Floods restrict mobility and demand from the farm sector, which uses diesel in irrigation pumps and trucking, also drops with the onset of rains.

Diesel demand was however almost 27 per cent higher year-on-year, supported by strong economic growth and a relatively low baseline for the same period in 2021 when a second wave of COVID-19 had impacted the economy.

Consumption of diesel was 43.6 per cent higher than the 2.2 million tonnes demand during July 1 to 15 of 2020. It was 13.7 per cent more than pre-COVID July 2019, the data showed.

Petrol sales fell 7.8 per cent to 1.27 million tonnes in the first half of July when compared to 1.38 million tonnes consumption in the same period of the previous month.

The consumption was, however, 23.3 per cent higher than July 2021 and 46 per cent more than the first fortnight of July 2020. It was 27.9 per cent more than pre-COVID July 2019.

Auto fuel demand in June was supported by a surge in summer travel to colder areas of the country to escape from the heat and vacations during annual breaks at educational institutions.

As the aviation sector opens up, India’s overall passenger traffic (both domestic and international) at airports inched closer to pre-COVID-19 levels.

Accordingly, jet fuel (ATF) demand grew by 77.2 per cent to 247,800 tonnes during July 1 to 15 when compared yearon-year. It was 125.9 per cent higher than July 2020 but 17.7 per cent lower than pre-COVID July 2019. Month-on-month, sales fell 6.7 per cent.

With strong economic growth of 7.1 per cent, India’s oil demand has been rising steadily since the country eased pandemic lockdowns.

“Monsoon months traditionally are low consumption months but overall oil demand will continue on its growth trajectory during the rest of the year,” an industry official said.

The government had on March 25, 2020, imposed a nationwide lockdown to control the spread of coronavirus. The complete lockdown, which halted mobility and crippled business, was slowly eased after two months.

Cooking gas LPG sales were up 14.15 per cent year-on-year to 1.24 million tonnes in the first half of July. This despite a Rs 50 per cylinder hike in prices.

LPG consumption was 16.6 per cent higher than July 2020 and 8.6 per cent more than July 2019.

Month-on-month too, the demand was up 8.3 per cent when compared with 1.15 million tonnes LPG consumption during the first half of June, the data showed.

Petrol sales fell 7.8% to 1.27 million tonnes in the first half of July when compared to 1.38 million tonnes consumption in the same period of the previous month