India's fuel consumption soars 24% year-on-year in May

Fuel demand in the country soared 23.8% last month as compared to the corresponding month a year ago, continuing its recovery from a relatively low base in 2021 - when the world's third biggest oil consumer was reeling under the shackles of the second wave of coronavirus. Consumption of fuel, which is a proxy for oil demand, stood at 18.27 million tonnes last month, as per data from the Indian oil ministry's Petroleum Planning and Analysis Cell.

Diesel consumption in the country rose 31.7% in May year-on-year to 7.29 million tonnes and was up about 32.6% from two years earlier. Petrol sales were 51.5% higher than a year earlier at 3.02 million tonnes.

Fuel consumption in May was the biggest year-on-year jump since April 2021, and also a modest rise of 0.4% from April. Though the yearly increase in fuel consumption is "because of a lower base, as demand in May 2021 was low due to high Covid cases at that time," the monthly rise was surprising, Refinitiv's analyst Ehsan Ul Haq said. He added, “However, high oil prices are likely to have an impact on consumption in the next few months. High fuel prices do not bode well for motorists all over the world."

The daily gasoil sales of Indian state refiners fell in May when compared to April because lower consumer spending curtailed truck movement in the country, as preliminary fuel sales data showed on June 1. However, the country's gasoline sales have been rising since the country eased pandemic lockdowns. This has been attributed to the fact the motorists are continuing their preference of using personal vehicles over public transport as they look at safety reasons as well as to avoid heatwaves.

Further, the country's retail inflation likely slipped modestly in May but stayed well above the central bank's upper tolerance limit for a fifth consecutive month.

(with inputs from Reuters)