India’s demand for oil products saw a significant increase in January, with a jump of 398,000 barrels per day (b/d) or 8.2% year-on-year, and a modest rise of 8,000 b/d from the previous month, according to a report by S&P Global Commodity Insights.
The increase was driven primarily by higher consumption of all products except fuel oil, with Liquefied Petroleum Gas (LPG) and gasoline recording the highest growth due to increased heating requirements and improved mobility following the year-end holidays.
Despite the overall rise, jet fuel consumption experienced a slight decline on the month, attributed to flight cancellations and delays amid foggy conditions in parts of the country. “Diesel consumption rose 3.7% on the year but fell on the month by 43,000 b/d as dense fog in northern India hampered mobility and affected construction and industrial activity,” said Himi Srivastava, Senior Analyst- South Asia Oil Markets at S&P Global Commodity Insights.
Srivastava also noted that gasoil demand is anticipated to remain high in the first quarter, expecting a year-on-year growth of 50,000 b/d. Diesel/gasoil is projected to be the most consumed fuel in India for 2024 and the largest contributor to growth.
India’s gasoline demand also showed robust growth, reaching 853,000 b/d in January from 823,000 b/d in December, spurred by an increase in personal mobility as people returned to work and companies adopted hybrid work models.
“Gasoline demand growth is expected to be robust in the first quarter, registering a growth of 65,000 b/d over Q1 2023, well supported by strong vehicle sales,” the report said. India’s gasoline demand has rebounded to above pre-COVID-19 levels and is expected to see a significant increase in 2024, with more than 200,000 b/d of growth over 2019.
The total demand for jet fuel and kerosene in January was 192,000 b/d, slightly lower than the previous month but up 7% year-on-year. Looking ahead, India’s oil demand is forecasted to grow by 203,000 b/d in 2024, with gasoil and gasoline being the major contributors to this growth, accounting for 33% and 31.5% respectively.
The report underscores that India’s oil demand is well-supported by solid economic growth, focusing on industrial and construction activities, and the anticipation of the upcoming general elections in 2024.
