India expects its oil consumption to expand at the slowest pace in six years as the economy sputters.
The nation’s consumption of petroleum products in the financial year to March 2020 is expected to rise by 1.3 per cent to 216 million tons, the oil ministry’s Petroleum Planning and Analysis Cell said in its estimates. That’s the slowest since the 0.9 per cent demand growth in 2013-14, when crude oil averaged over $100 a barrel.
Slowing consumption growth reflects a widespread slump in demand for goods from cars to houses. India’s economic growth is at a six-year low and latest data shows the country’s industrial production contracted for a third straight month in October, mainly dragged down by energy-intensive industries such as capital goods, infrastructure and construction goods.
Earlier this month, Fitch Solutions slashed its 2020 forecast for India’s oil demand growth to 3 per cent from an earlier estimate of 5 per cent because of weaker economic growth prospects in the coming quarters. The International Energy Agency, which expects the country to be the fastest-growing oil consumer through 2040, expects India’s demand growth to slow to 145,000 barrels a day in 2019 and recover to 180,000 barrels in 2020.
Consumption of diesel, the most-consumed petroleum fuel and the lifeblood of Indian manufacturing, transport and agriculture, is estimated to grow at the slowest pace in six years at 0.9 per cent, according to the PPAC.
“We think the story for gasoil is not over yet,” said Senthil Kumaran, a Singapore-based analyst at industry consultant FGE. “We expect a gradual recovery in diesel consumption in the next six months.”