India’s demand for the key auto fuels (diesel and petrol) is expected to grow by as much as 55,000 barrels per day (b/d) in the October-December festival season, S&P Global Commodity Insights said on Thursday.
India’s appetite for oil products in October-December is set to get a boost from the upcoming festival season as well as the agricultural season, recovering from a few months of subdued consumption because of excessive monsoon rains.
“Looking ahead to Q4, we estimate India’s oil demand to grow by 3.5-4 per cent year over year.
We forecast an annual demand increase of 50,000-55,000 b/d for both gasoline and diesel in Q4, although the northeast monsoon rains may slightly impede demand,” said Himi Srivastava, South Asia oil analyst at S&P Global Commodity Insights.
India meets 85 per cent of its crude oil demand through imports.
Crude oil futures moved higher on October 22 against a backdrop of continued uncertainty regarding the scope of an expected Israeli strike against Iran.
“Elections in major states like Maharashtra and Jharkhand are also expected to boost transportation fuel demand.
Additionally, the marriage season from November to January typically results in increased automobile sales and goods movement, further pushing up fuel demand,” added Srivastava.
The monsoon season, typically from June to September, was 8% above the long-term average in 2024, causing excessive rainfall and infrastructure damage across the country.
The southwest monsoon withdrew on Oct. 15, while the northeast monsoon began five days earlier, likely bringing above-average rainfall to the southern peninsula and eastern regions during October and November.
“India’s oil demand decreased year over year in September 2024 due to heavier-than-normal rainfall, which affected road movement, construction, and mining activities.
This particularly dampened diesel demand, which fell nearly 2 per cent compared to the previous year.
However, gasoline demand remained resilient, growing by 3 per cent year over year, although it was down from the previous month,” Srivastava said.
