How festivals, factory output propped up fuel demand in India

In what could be a sign that industrial activity is picking up in India, the country’s fuel demand climbed to an eight-month high in November, government data showed.

Festivals and a pick-up in industrial activity boosted sales in the world's third-largest oil consumer, a Reuters report said. 

Consumption of fuel, a proxy for oil demand, was 2.4% higher than the previous month, and rose 10.2% year-on-year to 18.84 million tonnes in November, according to the data from Indian oil ministry's Petroleum Planning and Analysis Cell (PPAC), Reuters said.

But isn’t this peak seasonal?

To an extent, yes. Retail sales always peak during October-November, when the country celebrates major festivals of Dussehra and Diwali.

What about industrial production? How is that looking?

India's factory activity in November expanded at its fastest pace in three months to 55.7, compared with 55.3 in October, showed the Manufacturing Purchasing Managers' Index, compiled by S&P Global.

And what about diesel sales?

Sales of diesel, which account for about four-fifth of India's refined fuel demand, were up 19.1% from 2021 at 7.76 million tonnes, while sales of gasoline, or petrol, rose 8.1% at 2.86 million tonnes, the PPAC data showed.

The rise in diesel demand points to a strong economy, with a pick-up in private as well as public transport demand along with a recovery in demand from the agricultural sector after the monsoon season.

How is the demand for cooking gas and bitumen looking?

Cooking gas or liquefied petroleum gas (LPG) sales increased 5.2% to 2.47 million tonnes, while naphtha sales fell 18.2% to 1.01 million tonnes.

Sales of bitumen, used for making roads, rose 30.3% while fuel oil use edged up 8.4% in November.