Overall refined fuels consumption, a proxy for oil demand, fell 1.4 per cent to 17.41 million tonnes on an annual basis in October, the steepest decline since June, according to data posted on the website of Petroleum Planning and Analysis Cell.
Sales of gasoline, or petrol, rose 8.9 per cent in October from a year earlier, to 2.54 million tonnes.
In April-October 2019, the first seven months of this fiscal year, India’s fuel demand grew by 1 per cent from a year ago, the data showed.
India’s domestic sales of diesel, which accounts for about two-fifths of overall fuel consumption, slipped 7.4 per cent year-on-year to 6.51 million tonnes. The annual decline was the most since January 2017.
Demand for diesel in the world’s third biggest oil importer is seen as a measure of industrial vibrancy as it is used, for example, to fuel trucks transporting goods across the country.
Declining diesel consumption is forcing refiners to export the fuel, adding to abundant supplies in Asia and weighing on refining margins for 10ppm gasoil.
A fall in auto sales over the last year in tandem with a shift by motorists to gasoline powered vehicles, has also contributed to the fall in diesel consumption.
Slowing economic and industrial activity has already led some global agencies to cut their Indian fuel demand forecasts.
The International Energy Agency expects oil consumption growth to drop to 170,000 barrels per day (bpd) in 2019, the slowest since 2014.
Asia’s third-largest economy expanded by just 5 per cent in the June quarter, its slowest pace since 2013, and the International Monetary Fund has cut its growth forecast for this fiscal year. In April-October 2019, the first seven months of this fiscal year, India’s fuel demand grew by 1 per cent from a year ago, the data showed.