India’s diesel consumption rose 7 per cent month-on-month to 7.8 million tonnes in June. On the other hand, demand for petrol at 3 MT and liquefied petroleum gas (LPG) at 2.23 MT remained largely flat during the month
Analysts largely attributed the rise in consumption of high speed diesel (HSD) to more demand from the logistics sector. According to Motilal Oswal’s logistics tracker, logistics activity picked up in June with daily average e-way bill generation rising 5 per cent M-o-M and daily average FASTag toll collections rising 2 per cent. Fleet utilisation levels stood at 80-85 per cent during the month.
“Volumes handled at major ports also rose 14 per cent Y-o-Y to 66 million tonnes. Coal/ petroleum, oil, lubricants (POL)/ other cargo reported a 51 per cent/ 10 per cent/ 37 per cent Y-o-Y growth in June 2022, whereas a sharp 59 per cent/ 27 per cent decline was seen in iron ore/fertiliser segments,” it added.
With harvesting season in progress, the demand for diesel was higher from the farm sector too.
Excise duty revision
Petrol consumption was also higher. While it is almost flat at 3 MT, compared to May, the consumption during the last two months has been the highest in the past one year. Analysts said that excise duty revision during May and some spending on travel by the middle class helped maintain the volume.
Overall, the consumption of petroleum products during June recorded a growth of 2.3 per cent Y-o-Y with a volume of 18.7 MT compared to the same period of the previous year.
The average crude oil (FOB) price for the Indian basket stood at $116.01 per barrel in June, against $109.51 a barrel in May and $102.97 in April. As on July 14, the price stood at $106.47 per barrel. The Indian basket represents a derived basket comprising Sour grade (Oman and Dubai average) and Sweet grade (Brent Dated) of crude oil processed in Indian refineries in the ratio of 75.62 : 24.38 during 2019-20.
The monthly consumption of petrol and diesel by the world’s third largest consumer had hit an all time high in March, even as retail prices of the two key commodities shot up to their highest levels for that month.
This was aided by economic activity inching back to normalcy as well as common man and industries stocking on fuel in anticipation of the government resuming fuel price mechanism post Assembly elections in five States. Fuel price revision resumed from March.
High prices of petrol and diesel led to some dip in demand during April. Subsequently, on May 21, the Centre slashed the excise duty on petrol by ₹8 per litre and on diesel by ₹6 a litre. Post the reduction, prices of petrol in Delhi came down to ₹96.72 a litre and diesel at ₹89.62 a litre.