As Per PPAC's Latest Forecast, India's Petroleum Products Demand Is Expected To Be Slashed Down To 5 percent From The Current Demand Growth Rate

The Demand Growth For Domestic Oil To Drop To 5 percent In FY24: As Per Forecast By Government

According to the forecast by the petroleum and natural gas ministry’s Petroleum Planning and Analysis Cell (PPAC), the domestic demand growth for oil is anticipated to plummet in 2023-24 to 5 percent following a momentous development of almost 10 percent in this financial year.

233.8 million metric tonnes (MMT) of refined products will be consumed by India in 2023-24, in contrast to the assessed 222.9 MMT of consumption in this fiscal, as per the forecast by PPAC, on its website without any explanation offered for the estimations.

Between April 2022 and January 2023, the consumption of petroleum products capered to 183.3 MMT by 9.6 percent year-on-year, with consumption of petrol and diesel surging by 14.5 percent and 14 percent, respectively. The aviation turbine fuel (ATF) demand has increased by 52 percent.

The demand growth, as per the PPAC forecast, is 4.3 percent for diesel and 7.7 percent for petrol between 2023-2024. The demand growth for ATF was forecasted at 16.4 percent.

The consumption of fuel is the national economic activity's barometer, and prompted demand growth this year was supported by improved industrial activity, customer demand and sales of vehicles.

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Diesel, which incorporates approximately 40 percent of petroleum product demand in the country, is used extensively for long-haul transport, mining and farming activity. This year its exceptional growth came as a surprise for several industry executives as well. The demand for diesel is also boosted by the lower availability of grid power.

The demand for petrol was aided by most employees returning to the office who were remotely working from home during the duration of the pandemic. Furthermore, the substantial boost in holiday travel also gave rise to the demand for diesel, petrol, and jet fuel.

Fuel Demand In India Witnessed Substantial Growth In February

Demand for fuel in India saw the most substantial rebound in February as consumption of diesel, and petrol increased by double digits following a winter lull in the last month, as per data. The sales of petrol jumped to 1.22 million tonnes by around 18 percent in the first half of February, in contrast to 1.04 million tonnes of consumption during the same time a year ago.

Sales were higher by 18.3 percent compared to the COVID-marred first half of February 2021 and more than 15.7 percent during the same time in 2020.

The month-on-month demand rose by 13.6 percent, flipping the drop during the last month. The sales fell by 5.1 percent month-on-month during January as vehicular movements were cut by cold circumstances.

The country's most used fuel, diesel, posted an almost 25 percent climb in sales to 3.33 million tonnes during February 1-15, in contrast to the same period last year.

Over the first half of February 2021, consumption was up by 16.7 percent and higher by 7 percent compared to 2020.

During the first half of January, month-on-month sales soared from 3.01 million tonnes to 10.3 percent.

The consumption of diesel in January dropped by 8.6 percent month-on-month basis as snowfall in higher spreads ceased truck activities. The sales rebound is the sharpest.

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Sources from the industry stated that demand for diesel surged as trucks returned to roads, and there was an uptick in the agriculture sector. The fuel's use in irrigation pumps and trucking assisted in building the momentum generated.

Demand for jet fuel (ATF) and cooking gas LPG also increased.

According to the article by Procurement Resource, the demand growth for domestic oil dropped to 5 percent in 2023-24, following a scorching development of almost 10 percent in this financial year. There was an increase in consumption of refined products, including petrol and diesel, on the back of improved industrial activity, customer demand and sales of vehicles. The demand for fuel in India saw strong growth in February compared to the COVID-marred first half of February 2021 and more than 15.7 percent during the same time in 2020.