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Business News/ Economy / India's oil demand up 4% in October, jet fuel consumption hits 44-month high: S&P Global
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India's oil demand up 4% in October, jet fuel consumption hits 44-month high: S&P Global

In October, the jet fuel consumption surged to a 44-month high mark at 177,000 bpd - the highest level since March 2020, when it was most impacted due to COVID-19.

On a year-on-year basis, total oil demand was up by 197,000 b/d, or 4 per cent as strong economic fundamentals continue.Premium
On a year-on-year basis, total oil demand was up by 197,000 b/d, or 4 per cent as strong economic fundamentals continue.

India's oil products demand increased by 80,000 barrels per day (bpd) on the month in October and rose 4 per cent to 197,000 bpd year-on year (YoY) driven by increased mobility and consumption during the festive season which began in the middle of the month. 

In October, the total jet fuel and kerosene demand increased to 185,000 bpd, up by 1.8 per cent from last month as air travel continued at a good pace. Also, the jet fuel consumption surged to a 44-month high mark at 177,000 bpd - the highest level since March 2020, when it was most impacted due to COVID-19. Diesel consumption rebounded during October and was higher by 14 per cent on the month and rose 9.3 per cent on the year.

India's petrol demand saw a small decrease in October to 864,000 bpd from 869,000 bpd in September due to an extra day in October, however, the overall consumption was 3 per cent higher in absolute terms as people flock to buy vehicles during the auspicious days of Navratri last month, according to Himi Srivastava, Analyst - South Asia Oil Markets, S&P Global Commodity Insights.

Also Read: Domestic crude oil production at 2.4 MMT in September, imports rise 6.1% YoY: PPAC

India's petrol, diesel demand growth forecast

India's petrol demand rebounded to above pre-COVID-19 levels in 2021 and is expected to be 22 per cent higher than 2019’s level in 2023, according to S&P Global Commodity Insights. The diesel demand is expected to be close to 7 per cent above pre-COVID-19 levels this year.

The movement of trucks gained momentum on the need to transport goods along the supply chain. This is because the seller stock rise during festivals to meet customer demand across the states.

The consumption also increased from the agriculture sector as October is typically the harvesting period for paddy crops while factory activities increased to meet the rising consumer demand, according to the global rating agency.

Also Read: Oil drops to 3-month low as waning demand in US, China outweigh supply cuts; Brent crashes to $79/bbl

According to AirNav Radar Box, India’s domestic flights in October were up by 1 per cent as compared to the previous month but up by 4 per cent on the year. International travel was also up in October over September by 1 per cent and 20 per cent above last year. 

In line with the increase in fuel demand, October also witnessed an increase in auto sales with a growth of 13 per cent on the month. All automotive categories experienced momentum on the festive season demand, notably, two-wheeler vehicles seeing a 15 per cent increase, passenger vehicles at 7 per cent and commercial vehicles up by 10 per cent on the month.

India's oil demand growth forecast

Overall, India's oil demand is expected to grow by 258,000 bpd in 2023, revised higher by 9,000 bpd from the global agency's previous update on strong diesel sales. India’s oil demand in 2023 is expected to be 7 per cent above 2019, before rising to about 11 per cent in 2024, said S&P Global.

Meanwhile, India’s manufacturing activity in October grew at the slowest pace in eight months, dragged down by slowing demand in the consumer goods segment, even as new orders dropped to the lowest in a year and cost pressures intensified. The S&P Global India Manufacturing purchasing managers index (PMI) decreased to 55.5 in October from 57.5 a month earlier. 

Though the October PMI Manufacturing data was above its long-run average of 53.9, it was the slowest rate of expansion recorded since February. Additionally, S&P Global India Services PMI slowed to a seven-month low in October due to low demand and higher costs. The S&P Global India Services PMI fell to 58.4 in October from 61 in September.

On November 8, crude oil prices declined more than $1 to hit their lowest level in more than three months on concern over waning demand in major oil consumers - United States and China. Brent crude futures fell $1.68, or 2 per cent, to $79.93 a barrel, and US crude lost $1.78, or 2.3 per cent, to $75.59. Both benchmarks hit their lowest since late July, according to news agency Reuters.

 

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ABOUT THE AUTHOR
Nikita Prasad
Nikita covers business news and has been producing news on digital platforms since 2018. She writes on economy, policy, markets, commodities, industry. Her core areas of interests include infrastructure, energy, oil and gas, railways, and transport/mobility. She has worked for business news channels like Moneycontrol, NDTV Profit, and Financial Express in the past. If you have story ideas/pitches/reports or quotes/views to share, reach her at nikita.prasad@htdigital.in.
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Published: 08 Nov 2023, 08:41 PM IST
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