India's fuel consumption in October registered its first year-on-year increase since February, as slowing coronavirus cases and increased mobility accelerated an economic recovery, data showed on Thursday. Consumption of refined fuels, a proxy for oil demand, rose 2.5% in October from the prior year to 17.78 million tonnes and nearly 15% higher from the previous month, data from the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Petroleum & Natural Gas showed.
"GST (Goods and Services Tax) collections, power demand, PMI etc all are indicating increased economic activity and COVID cases are also coming down to a point where demand is coming back to normalcy," said K Ravichandran, senior vice president at ICRA, a unit of Moody's Investors Service.
With public transportation gradually picking up, fuel demand is expected to improve further, he added.
India's daily COVID-19 case count has steadily declined since September, although total cases remain north of 8.5 million- the second highest in the world. Activity in India's dominant services industry also expanded for the first time in eight months in October as demand surged.
Diesel consumption, a key parameter linked to economic growth and which accounts for about 40% of overall refined fuel sales in India, rose 7.4% to 6.99 million tonnes on an annual basis, and climbed about 27% month-on-month. Sales of petrol rose by 4.3% from a year earlier to 2.65 million tonnes, and by 8.2% from 2.45 million tonnes from September.
Cooking gas or liquefied petroleum gas (LPG) sales increased by 3% to 2.42 million tonnes from a year earlier and 6.6% from the previous month, while naphtha sales rose 15% to 1.30 million tonnes and about 14% month-on-month. Sales of bitumen, used for making roads, rose about 47% versus last year, and fuel oil increased by about 12.8% last month.