New Delhi: India’s sustained uptrend in oil consumption came to a halt and slipped into the red in April from March levels as rising domestic retail fuel prices on the back of surging crude took a toll on gasoline, diesel and LPG demand, said S&P Global Commodity Insights.
However, analysts said the trend could get reversed in May.
“Middle distillates will account for more than half of 2022 growth, partly due to a slow recovery last year. But there are still risks of downward adjustments as the Russian-Ukraine conflict continues to evolve and the worry of a global or regional economic recession has been growing,” said Lim Jit Yang, an advisor for oil markets at S&P Global Commodity Insights.
Domestic oil products demand fell 4 per cent month on month to 18.64 million tonne, or 4.9 million barrel per day, in April, it said, quoting data from the Petroleum Planning and Analysis Cell.
The rise in crude prices due to the Ukraine-Russia conflict pushed up domestic prices of transportation fuels and other oil products in India.
Gasoline demand fell 3.8 per cent month on month to 2.8 million tonne in April from a three-year high in March, when Covid-19-related curbs were withdrawn and consumption rose sharply.
Demand for diesel, the main constituent in the overall demand for oil products, fell 6.5 per cent month on month to 7.2 million tonne in April.
Demand for LPG, naphtha and jet fuel also fell by 12.7 per cent, 4.3 per cent and 0.7 per cent, respectively, month on month in April.
That said, India’s overall demand for oil products, however, rose 9.6 per cent year on year in April. Demand for diesel rose 7.9 per cent year on year to 7.2 million tonne, while demand for gasoline rose 17.4 per cent to 2.8 million tonne.
Demand for LPG rose 2.4 per cent year on year to 2.16 million tonne, while demand for jet fuel rose 31.8 per cent to 539,000 tonne, it said.
During January-April period, demand for oil products rose 4.7 per cent year on year to 73.25 million tonne, or 4.8 million barrel per day, as economic activity improved after the country’s third wave of Covid-19.
Demand for diesel and gasoline rose 1.9 per cent and 5.1 per cent in January-April, respectively, while the demand for naphtha fell 6.6 per cent year on year.
Demand for jet fuel and LPG also rose in the four-month period by 12.3 per cent and 5.4 per cent, respectively.
According to Platts Analytics by S&P Global Commodity Insights, India’s oil demand is expected to grow by 245,000 barrel per day year on year in 2022, revised up by about 20,000 barrel per day from an earlier outlook, due to better-than-expected demand trends.
But year-on-year oil demand growth could ease to 195,000 barrel per day in 2023. Gasoil demand is set to improve as manufacturing activity regains momentum, while jet fuel use will also improve as international flights start to pick up, though they are likely to remain well below capacity, Platts Analytics added.