As the monsoon season begins in August, the demand for fuel in India continues to decrease. During the first half of August, gasoline consumption is nearly unchanged. But demand for diesel, which is the most extensively used fuel in the country, fell by 11.2% between August 1 to 15.
The beginning of the monsoon season in India led to a decrease in consumption in important sectors including agriculture. According to preliminary statistics released by the industry on Tuesday, this marked the second consecutive month that diesel demand in India has declined.
In July, there was a decrease in monthly demand for both gasoline and diesel. During the first 15 days of August, demand for diesel, which is the most commonly used fuel in the country, decreased by 11.2% to 2.82 million tons. The demand for diesel was 3.17 million tons during the same time period in the previous month. This is in contrast to the nearly stable consumption of gasoline during this time period.
Since the country began lifting some of its pandemic lockdowns, India’s oil demand has been steadily climbing because to the country’s robust economic growth of 7.1%.
Impact of monsoon on India’s fuel consumption
The onset and severity of the monsoon have a significant impact on the demand for diesel in the country. As a result, consumption is generally lower from July to September than it is from April to June. The monsoon season makes travelling more difficult, and demand for diesel from the agricultural sector, which relies on the fuel for irrigation pumps and haulage, decreases when the rains start to fall.
Rise in diesel demands post Covid
Diesel demand was, on the other hand, 32.8% higher year-on-year. This was backed by robust economic development as well as a relatively low baseline for the same period in 2021 when the second wave of COVID-19 had hit the economy.
During the first fifteen days of August in 2020, the consumption of diesel was 58.2% greater than the demand of 1.78 million tons. According to the statistics, this was a 23% increase from pre-COVID August 2019 levels.
Sales of petrol fuel
In the first half of the month of August, sales of petrol reached 1.29 million tons. This is a 0.8% increase when compared to the 1.28 million tons that were used during the same time period in the month prior.
The consumption was up 30.6% compared to the month of August 2021 and up 43.4% compared to the first two weeks of August 2020. It was 36% higher than prior to the COVID being implemented in August 2019.
Demand outlook of air and auto fuels
Demand for diesel was bolstered in June. An increase in the number of people taking holidays during the summer months when schools were on break and travelling to cooler parts of the country away from the oppressive heat, was seen. After that, it snowed in July, and now it’s falling in August.
When compared to the same period last year, the demand for jet fuel (ATF) increased by 42.2% to a total of 2,48,100 tons between August 1 and August 15. It was 121% greater than August 2020, but 18% lower than August 2019 prior to the implementation of COVID. Sales were down 0.75 percent from the previous month.
Demand for LPG during monsoon
The first half of the month of August saw sales of cooking gas LPG increase by 8.19 percent year-on-year, reaching 1.14 million tons. The amount of LPG fuel that was consumed was 15.3% greater than it was in August 2020. It was also 5.5% higher than it was in August 2019.
According to the data, there was a 7.8% decrease in demand from one month to the next. As compared to the 1.24 million tons of LPG that were consumed during the first half of July, demand for LPG had fallen.
The onset and severity of the monsoon has a significant impact on the demand for diesel in the country. Diesel demand from the agricultural sector, which relies on the fuel for irrigation pumps and haulage, decreases when the rains start to fall. In July, there was a decrease in monthly demand for both gasoline and diesel. However, despite the decrease in monthly demand, 2022 saw higher demand levels for fuels in the post Covid era.
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