New Delhi: Indian domestic oil product sales in July rose an annual 7.8% as high diesel demand from power producers and a drop in gas supplies outweighed the impact of higher fuel prices and falling car sales.
Fuel sales growth dropped in June, when the government raised petrol and diesel prices by about 10%, but the decline was primarily because dealers reduced inventories to normal levels after filling up ahead of the expected hike in prices.
Total sales of refined products, a proxy for demand, jumped to 10.7 million tonnes as Asia’s third-largest economy continues to guzzle fuel, helping global oil prices remain well above $100 a barrel.
Car sales in India fell an annual 1.7% in July, their first decline in about three years, as rising interest rates and higher prices crimped demand.
In July, diesel sales, which account for about third of local sales of refined products, rose 10.3% to 4.08 million tonnes, boosted by its use as a substitute for more costly fuel oil, prices of which are not set by the government.
June’s fuel price increase, the largest in 12 years, only partly offset the impact of crude oil’s record run and oil firms say they are still facing heavy losses.
The International Energy Agency in its latest monthly report said the price hike had merely slowed the pace of oil demand growth, rather than fostering a contraction in absolute levels.
It has kept its Indian oil demand outlook virtually unchanged at 3.1 million barrels a day in 2008, a growth of 4.6% over 2007, and 3.2 million bpd in 2009.
Petrol sales rose 6.3% to 913,100 tonnes, while naphtha sales grew 20.8% as many gas users switched to the liquid fuel after problems with a pump at the Dahej gas terminal of Petronet LNG.
Jet fuel sales recorded single-digit growth at 3.8% in July as high prices led to higher air fares, and the rationalisation of routes by struggling airlines.