In the fiscal year to March 2019, fuel demand rose by 3.4%, the lowest in five years.
During April-September, consumption of refined fuels – a proxy for oil demand – rose 1.4% from a year ago, according to government data.
“It means in the next few months (in this fiscal year) fuel demand needs to grow by 3%-4% to reach last year’s levels, which looks unlikely,” M.K Surana, chairman of state-run Hindustan Petroleum Corp told a news conference.
HPCL controls about a quarter of India’s retail fuel market.
Slowing economic and industrial activity has already led some global agencies to cut their fuel demand forecast for India.
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% in the June quarter, its slowest pace since 2013, and the International Monetary Fund has cut its growth forecast for this fiscal year to 6.1% from an initial 7%.
Industrial output shrank at its fastest rate in more than six years in August, and passenger vehicle sales slumped 23.7% in September, the eleventh straight month of declines.
“Diesel (growth) is a concern, petrol is not,” Surana said, adding gasoil demand should pick up now because the monsoon season was over.
Heavy rains impact road transportation, construction and industrial activity and, by extension, demand for diesel.
In April-September, annual diesel demand grew by just 1% while gasoline demand rose by 9%.
Last year, diesel demand grew by 3%. “Definitely I don’t think it will be 3% in this year, it will be lower than that”, Surana said.