India's October fuel demand marks first year-on-year gain in 8 months

(Reuters) - India’s fuel consumption in October registered its first year-on-year increase since February, as slowing coronavirus cases and increased mobility accelerated an economic recovery, data showed on Thursday.

A worker holds a nozzle to pump petrol into a vehicle at a fuel station in Mumbai, India, May 21, 2018. REUTERS/Francis Mascarenhas/File Photo

Consumption of refined fuels, a proxy for oil demand, rose 2.5% in October from the prior year to 17.78 million tonnes and nearly 15% higher from the previous month, data from the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Petroleum & Natural Gas showed.

“GST (Goods and Services Tax) collections, power demand, PMI etc all are indicating increased economic activity and COVID cases are also coming down to a point where demand is coming back to normalcy,” said K Ravichandran, senior vice president at ICRA, a unit of Moody’s Investors Service.

With public transportation gradually picking up, fuel demand is expected to improve further, he added.

India's fuel consumption rises for 2nd straight month

India’s daily COVID-19 case count has steadily declined since September, although total cases remain north of 8.5 million- the second highest in the world.

Activity in India’s dominant services industry also expanded for the first time in eight months in October as demand surged.

Diesel consumption, a key parameter linked to economic growth and which accounts for about 40% of overall refined fuel sales in India, rose 7.4% to 6.99 million tonnes on an annual basis, and climbed about 27% month-on-month.

Sales of gasoline, or petrol, rose by 4.3% from a year earlier to 2.65 million tonnes, and by 8.2% from 2.45 million tonnes from September.

Cooking gas or liquefied petroleum gas (LPG) sales increased by 3% to 2.42 million tonnes from a year earlier and 6.6% from the previous month, while naphtha sales rose 15% to 1.30 million tonnes and about 14% month-on-month.

Sales of bitumen, used for making roads, rose about 47% versus last year, and fuel oil increased by about 12.8% last month.

Reporting by Sumita Layek and K. Sathya Narayanan in Bengaluru, Editing by Alexandra Hudson