Fuel consumption in September fell by 1.6% year-on-year to 17.92 million metric tons, its lowest in two years, oil ministry data showed on Monday (October 7, 2024), as above-normal monsoon rains continued to weigh on diesel demand.

WHY IT IS IMPORTANT:

India is the third-largest consumer and importer of oil. The data is a proxy for the country's oil demand. KEY QUOTE Above-normal monsoon rains likely weighed on agricultural demand, hence weakness in demand for diesel, said analyst Giovanni Staunovo of UBS.

BY THE NUMBERS

On a monthly basis, fuel demand was down 2.7% from 18.41 million tons in August, data from the Petroleum Planning and Analysis Cell's (PPAC) website showed. Demand last month was at its lowest since September 2022. Sales of gasoline, or petrol, rose 3% from a year earlier to 3.15 million tons. Diesel consumption was down by 1.8% year-on-year to 6.37 million tons in September, also its lowest in years. Cooking gas or liquefied petroleum gas (LPG) sales increased 1.6% to 2.59 million tons on an annual basis, while naphtha sales rose 0.6% to 1.03 million tons.

CONTEXT

India is likely to receive above average rainfall in October after unusually high volumes for the past three months, a senior weather department official said last week, which could damage summer-sown crops ready for harvesting. An above-normal monsoon season decreases diesel demand as increased rainfall reduces the need for diesel-powered irrigation and farm machinery use.