India’s Fuel Demand- An Important Indicator Of The Indian Economy.

Informatics from the oil ministry’s Petroleum Planning and Analysis Cell (PPAC) indicated that India’s consumption of fuel, a proxy for oil demand, was down roughly 0.3% year on year in April but down more than 10% from March this year. According to UBS analyst Giovanni Staunovo, oil consumption is holding up well and should continue to rise due to India’s steady economic development. Consumption fell to 18.41 million tonnes from 18.45 million the previous year.

India reduced the windfall tax on petroleum crude earlier this month while leaving the duty on petrol, diesel and aviation turbine fuel unchanged.

Petrol sales increased by 2.9% to 2.9 million tonnes. 

Cooking gas, often known as liquefied petroleum gas (LPG), sales fell 10.8% month on month to roughly 2.2 million tonnes. 

With the ongoing expansion of the aviation industry, India’s overall passenger flow at airports has approached pre-COVID levels. Sales of jet fuel surged 18.2% year on year to 0.65 million tonnes in April. In line with the trend, demand for jet fuel (ATF) increased 14% to 2,84,600 tonnes in the 1-15th of April compared to the same period last year. It was 35% greater than April 1-15, 2021, and 467.6% higher than the same time in 2020. However, sales declined 3.8% month over month.

Meanwhile, sales of fuel, or petrol, used in passenger cars fell 7.4% from the previous month but up 2.9% year on year. Petrol sales increased by nearly 2% to 1.14 million tonnes compared to last year from April 1 to 15. However, sales declined 6.6% month over month. Petrol sales were down 1.4% yearly in the first half of March, while diesel sales were down 10.2%. Petrol consumption in the first half of April was 14.6% higher than the COVID-affected period of April 1-15, 2021, and over 128% higher than the same time in 2020.

Diesel sales grew 8.6% to 7.82 million tonnes. Diesel sales reached a new high, showing healthy industrial activity in the world’s third-largest oil user. Gasoil, often known as diesel, accounts for around two-fifths of refined fuel use in India and is directly related to industrial activities. In April, India’s manufacturing activity increased at its fastest rate in more than four months.

In India, diesel sales surged dramatically in the first half of April as agricultural activity increased and trucks grew to satisfy industrial demand. Diesel demand, which accounts for almost two-fifths of total demand in the nation, increased by more than 15% to 3.45 million tonnes in the 1-15th of April compared to the same period last year. Month-on-month sales increased 8.4% when compared to 3.19 million tonnes of diesel used in the first half of March, which had seen a seasonal slowdown.

Conclusion.

India’s economy is expanding steadily, with help from both the services and manufacturing sectors. According to industry authorities, the country’s oil consumption was sustained by strong industrial activity. In terms of goods, diesel was the key driver of oil demand, as agricultural needs increased, as did demand for power generation and industries. Diesel was encouraged by its use in irrigation pumps and trucks.

Increased car sales and consumer goods demand enhance diesel sales, which is the major fuel for long-haul trucks that deliver raw materials to manufacturers and completed items to warehouses and retail outlets. Diesel, which accounts for around 40% of India’s total oil consumption, has largely recovered from the Covid-caused interruption. Its April sales were 9.1% higher than the previous month. Petrol, which rebounded quicker from the Covid-lows, sold 18.5% more in April than the previous month. However, jet fuel sales were still 4% lower than in April 2019, indicating that the aviation industry required more time to completely recover. However, they were 15.4% greater than in April 2022.

Overall, it seems that the Indian economy is back on track to pre-Covid levels.

Proofread & Published By Naveenika Chauhan