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    India's fuel demand dips to lowest in over two years

    Synopsis

    Consumption of fuel has touched its lowest since July 2017 indicating that the economy is in the throes of a slowdown. Diesel, which is mostly used in commercial vehicles and farms, saw a drop in consumption of more than 3 per cent in September.

    Agencies
    Sales of gasoline, or petrol, were 6.3% higher from a year earlier at 2.37 million tonnes.
    NEW DELHI: India's fuel demand slipped to its lowest in over two years in September after a fall in diesel and industrial fuel consumption negated the rise in petrol and LPG consumption.

    Consumption of petroleum products in September dropped to 16.01 million tonnes, its lowest since July 2017, from 16.06 million tonnes in the same month last year, according to data from the Petroleum Planning and Analysis Cell (PPAC).

    Diesel, the most used fuel in the country, saw demand drop by 3.2 per cent to 5.8 million tonnes, while naphtha sales were down by a quarter to 844,000 tonnes.

    Bitumen, used in road construction, too saw consumption drop by 7.3 per cent to 343,000 tonnes. Fuel oil sales edged 3.8 per cent lower in September to 525,000 tonnes.

    These downward trends negated the rise in cooking gas (LPG) and petrol demand.

    The sale of petrol rose 6.2 per cent to 2.37 million tonnes, but sale of jet fuel or ATF fell 1.6 per cent to 666,000 tonnes.

    LPG consumption surged 6 per cent to 2.18 million tonnes on the back of government's push for the use of cleaner fuel in household kitchens in rural areas in place of firewood to check pollution and safeguard the health of women.

    Kerosene, which is fast being replaced by LPG and natural gas as a cooking medium, saw demand fall almost 38 per cent to 176,000 tonnes.

    Petroleum coke consumption was however 18 per cent higher at 1.73 million tonnes.

    Meanwhile, Fitch Solutions revised downward its India oil demand forecast, reflecting a deteriorating macroeconomic backdrop and rising risks to growth.

    "We now forecast demand growth to average 3.8 per cent y-o-y over the three years to 2021, down from 4.6 per cent previously," it said, adding softening of Indian fuel demand adds to an increasingly bearish outlook for fuel demand globally.

    "We had previously flagged India as the outperformer, forecast to overtake China as the global engine for growth. While the view still holds in the longer term, the near-term prospects have weakened," it said.

    More diversified demand growth will offer a level of resilience moving forward, but structurally lower demand growth in China and common Asian emerging markets' exposure to a weaker external environment will drag to the downside.

    "We have revised down our India oil demand forecast, reflecting a deteriorating macroeconomic backdrop and rising risks to growth. In part this reflects the downward revision to the country's GDP growth forecast," Fitch said.

    "Growth has disappointed expectations, dragged down by slowing private consumption, weakened investment and underperformance in the services sector," it added.

    In response, the government has unleashed a raft of stimulus measures, including tax cuts, a liquidity boost for the banking sector and higher spending on autos.

    "Our Country Risk analysts are relatively bullish on the prospects for headline economic growth from 2020 onwards, forecasting a rebound from 6.4 per cent in real terms in 2019, to 6.9 per cent and 7.3 per cent in 2020 and 2021, respectively," it said.

    Auto sales growth is also set to recover next year, supported by low base effects and improved policy support, which will, in turn, offer a lift to oil demand, it said.

    "That said, we do not expect demand growth to return to its 2018 highs, as a challenging external environment, stresses in the banking and shadow banking sectors and tight fiscal constraints on the government mar performance in several of the more energy-intensive segments of the domestic economy," it added.
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    37 Comments on this Story

    Nandakumar Sadasiva Bhat414 days ago
    If fossil fuel demand comes down it means less fuel is burnt and less pollution. Anyhow it is predicted that by 2025 oil demand will come down drastically all over the world. Introduction of EVs will reduce the Oil demand and thus pollution.
    Pl do not abuse Modiji & his govt for this.
    Valerian Pereira414 days ago
    Like China doing:
    Go global to all resurces ..deposits,Mines, quarries agressively and start working like the Chinese do.
    be it USSR/Africa/Central-Sout America../Middle east/ Iran/iraq..
    all over the world.
    Follow their strategies, policies. deploy our top cos..with
    Military in civil clothes.
    same as china.
    they secure the Raw material .. minerals.. Energy.oil/gas/coal etc
    and now securing their Dea lanes, road by silk route
    Purely Business.purely..Industrious keep their people gainfully engaged, employed: prosperous and Happy..
    all of their income.. money from business.trade is coming back to their own Banks unlike earlier it used to go to the Channel Islands or Mauritius or Maldives or Swiss banks..
    all accountable.Transparenecy.
    ESMAIL MEMON414 days ago
    GOVERNMENT SHOULD CLEAR ALL THE DUES OF THE LESSORS OF PREMISES OF MTNL MUMBAI ALSO WHO HAVE NOT BEEN PAID RENT FROM LAST SEVEN MONTHS, LESSORS OF THE PREMISES HAVE TO PAY GST 18% EVERY MONTH, INCOME TAX EVERY QUARTER, ELECTRICTY BILLS, STAFF SALARY, MUNICIPAL TAXES {PROPERTY TAXES HIGHEST IN ASIA} NON AGRICULTURE TAX ETC PLZ DO JUSTICE TO LESSORS WHO HAVE GIVEN THEIR PREMISES ON RENT TO MTNL MUMBAI IF UNABLE TO PAY PLZ VACATE THE PREMISES IMMEDIATELY. PLZ DO JUSTICE TO THE LESSORS OF HAVE GIVEN THEIR PREMISES ON LEASE TO MTNL MUMBAI.
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