India’s oil products demand in February increased by 132,000 barrels per day (b/d), or 2.4 per cent year on year, and by 256,000 b/d month on month, with consumption of all products rising except for fuel oil and some other minor products.

S&P Global Commodity Insights said that LPG and gasoil/ diesel recorded the highest year-on-year growth as household consumption remained robust amid cooler weather in the north while diesel consumption increased in line with the receding winter and increasing mobility.

Fuel oil consumption remained moderated as utilities and industries increased usage of alternate sources, offsetting the impact of rising bunkering demand, it added.

Diesel consumption In February rose by 2.6 per cent on year and on month by 126,000 b/d as winter fog receded and mobility picked up momentum. Further, with normalisation of weather, industrial and construction activities saw an uptrend leading to higher gasoil use, S&P Global Commodity Insights Senior Analyst- South Asia Oil Markets Himi Srivastava said.

The truck drivers’ strike in January had also led to lower demand in that month which improved in February showing a higher on-month increase, she added.

“Overall, gasoil demand is expected to remain elevated in Q1 and register a growth of 60,000 b/d on year while Q2 is expected to see an increase of 75,000 b/d on the back of harvesting activities picking up, along with the election period in India. For 2024, diesel/gasoil will remain the most consumed fuel in the country and is also expected to be the largest contributor to growth,” Srivastava said.

Total jet fuel and kerosene demand was at 202,000 b/d in February, up by 16,000 b/d on year as strength in air traffic continued after a slight drop in January due to unfavourable weather.

“According to AirNav Radar Box, India’s flight departures during February increased by 3.1 per cent on month and were up by 4.8 per cent on year. This year began on a good note from a domestic passenger footfall perspective with close to 5 per cent year on year growth in January, which is 3 per cent higher than the 2019 level as well. In Q1, we expect jet/kerosene consumption to grow by 19,000 b/d year on year,” she said.

Overall, India’s oil demand is expected to grow by 206,000 b/d in 2024. Gasoil and gasoline will be the highest contributors, together accounting for 65 per cent of the growth.

Oil demand is holding up quite well and should continue rising, supported by solid economic growth with more focus on industrial and construction activity along with the country’s upcoming general elections in 2024.