Fuel Demand Falls In June Due To Monsoon Slowdown

India's fuel demand eased 3.7 per cent in June month-on-month, government data showed on Friday, as monsoon rains restricted mobility in the world's third-biggest oil consumer.

Consumption of fuel, a proxy for oil demand, totalled 19.31 million tonnes in June, down from 20.06 million tonnes in May, data from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry showed.

Sales of diesel, mainly used by trucks and commercially-run passenger vehicles, decreased about 3.7 per cent in June to 7.91 million tonnes from a month earlier.

In May, diesel sales hit an all-time high of 8.22 million tonnes, as per PPAC data going back until 1998.

"Seasonality is starting to kick in as the monsoon season-driven demand decline starts to transpire ... compared to June, we expect oil demand to come in only marginally lower in July," said Viktor Katona, lead crude analyst at Kpler.

Fuel demand in India, the world's third-biggest oil importer and consumer, typically falls during the four-month monsoon season beginning in June as parts of the country are hit by heavy floods.

"Cyclone Biparjoy also adversely impacted bunkering operations across the country as ports in Gujarat were forced to shut for several days, adding to the seasonal downside," Katona said.

This year, the monsoon arrived on the coast of southern Kerala state on 8 June, more than a week later than normal, and its progress was later stalled by severe cyclone Biparjoy.

Gasoil, or diesel, accounts for about two-fifths of refined fuel consumption in India and is directly linked to industrial activity.

Sales of gasoline, or petrol, were about 5.9 per cent lower than the previous month at 3.15 million tonnes.

Cooking gas or liquefied petroleum gas (LPG) sales fell 4.9 per cent to 2.23 million tonnes and naphtha sales dropped 15 per cent to 976,000 tonnes.

Sales of bitumen, used for making roads, ticked up 0.8 per cent and fuel oil use fell 9.8 per cent in June.