India's Diesel and Petrol Demand Rebounds in September on Festival Stocking and GST Cuts

India's fuel consumption showed a strong recovery in September, driven by festive season preparations and recent GST rate reductions. The uptick in demand comes as a positive sign for the energy sector after a slowdown observed between June and August due to monsoon disruptions.

Diesel Demand Surges

Diesel consumption, a key indicator of economic activity, witnessed a significant increase:

• 6.40% year-on-year growth, reaching 6.77 million tonnes
• 2.90% month-on-month rise

The boost in diesel demand is largely attributed to advance stockist bookings ahead of the October-December festive and wedding season, spurred by GST rate cuts.

Petrol Consumption Climbs Despite Rains

Petrol consumption also showed robust growth:

• 7.50% year-on-year increase, totaling 3.39 million tonnes
• 4.00% decline from August levels due to heavy rains limiting personal mobility

The year-on-year growth in petrol consumption indicates a strong underlying demand, despite the temporary setback caused by above-normal rainfall in September.

Other Fuel Categories

• Jet Fuel: Consumption rose 0.70% month-on-month to 716,000 tonnes but fell 1.40% year-on-year, affected by rain-impacted air travel.
• Cooking Gas: Demand increased by 6.50% in September, reflecting growing domestic consumption.

Factors Influencing Fuel Demand

1. Festive Season Preparations: The approaching October-December festive and wedding season has prompted advance bookings and increased consumption.
2. GST Rate Reductions: Recent cuts in GST rates have incentivized stockists to make advance purchases, particularly benefiting diesel demand.
3. Monsoon Impact: September rains were 15% above normal levels, affecting personal mobility and air travel.

Outlook

Analysts are optimistic about the continued growth in petroleum consumption in the coming months, citing two main factors:

1. The positive impact of GST relief on various sectors
2. Anticipated increase in demand driven by the festive season

The recovery in fuel consumption to September levels is particularly noteworthy, considering the record highs reached in May and the subsequent slowdown during the monsoon months of June to August.

As India moves into its peak festive season, the energy sector will be closely watching how these trends evolve, potentially setting the tone for economic activity in the final quarter of the year.