India’s diesel consumption grew 10 per cent month-on-month (M-o-M) in November 2022 to hit 7.7 million tonnes (mt), the second-highest so far in FY23 after June (7.8 mt) as well as in the last 12-month period.
Petrol or motor spirit (MS) consumption remained almost flat at 2.9 mt last month. So far in the current financial year, petrol consumption has been in the range of 2.8-3 mt, data from the Petroleum Planning and Analysis Cell (PPAC) show.
Post the seasonally weak July-September quarter, India’s auto fuel demand inches up during the festival season period of October-December, further aided by increasing industrial and farm activity.
According to Crisil, petrol and diesel sales for the last five fiscal years have continued to increase throughout October-December, before moderating in January and February and peaking in March.
After hitting the lowest consumption so far in FY23 during July and August at 6.3 mt, demand for diesel, considered the mainstay of India’s farm and transport sector, has been rising backed by a pick-up in the Rabi sowing season.
A senior official with an oil marketing company (OMC) said diesel consumption gains momentum further as sowing and irrigation activity during the Rabi season picks up in November and December. Use of irrigation pumps and tractors fuels this demand.
“Last November, there were rains in key consuming States which impacted diesel sales. But this time farm activity is continuously rising. Besides, economic activity has also picked up with work on road and other infrastructure projects gaining momentum,” he explained.
For instance, India’s national highway (NH) construction activity, which slowed down to around 19.5 km per day in H1 FY23, has picked up in the second half aided by softening of raw material prices and higher number of tenders floated by the government.
In October, the overall highway construction stood at 4,060 km against 3,559 km in September and 2,912 km in August. Awarding rose to 5,007 km in October from 4,092 km and 2,706 km in September and August, respectively.
S&P Global Commodity Insights projects India’s oil consumption in 2022 calendar year to edge past 2019 levels.
“In near term, we expect India’s oil demand to rise sequentially by about 210,000 barrels per day in the fourth quarter (October-December) after the monsoon season, boosted by festive and holiday seasons. On a year-on-year basis, the demand in Q4 is expected to grow about 100,000 barrels per day, down from 370,000 barrels over the first three quarters of this year, which was boosted by a low base in the previous year,” it added.