Consumption of fuel, a proxy for oil demand, rose by 5% from a year earlier to 4.83 million barrels per day (20.5 million tonnes), the highest recorded in data going back to 1998 from the Indian Oil Ministry's Petroleum Planning and Analysis Cell. Viktor Katona, lead crude analyst at Kpler, noted that bitumen, used for building roads, was the main source of growth in March, whereas transportation fuels, specifically diesel and gasoline, had been the drivers in previous months.
"This is most certainly a reflection of India's robust economic growth and the infrastructure building spree still mirroring that strength." Sales of bitumen jumped 16.5% from February, while jet fuel sales rose more than 10.4% to 0.69 million tonnes and diesel sales were up 11.4% to 7.80 million tonnes.
On an annual basis, sales of gasoline, or petrol, rose 6.8% to 3.1 million tonnes in March, while cooking gas, or liquefied petroleum gas (LPG), sales slipped 2.7% to 2.41 million tonnes.
Independent oil market analyst Sugandha Sachdeva said that the overall jump in consumption could have been driven by the government's increased capital expenditure allocation.
"That means huge demand for construction and infra(structure) leading to more demand for oil products, especially in a pre-election year."
Increased oil products exports to Europe amid Western sanctions on Russia and a travel revival boosting jet fuel demand could be additional drivers, Sachdeva added. India outlined plans in March to invest billions of dollars in airports, aircraft and recruitment as the world's fastest-growing economy seeks to meet booming air travel demand. But Kpler's Katona cautioned that infrastructure spending and construction could slow during the June-September monsoon season. (Reporting by Ananya Bajpai, Arpan Varghese, Ashitha Shivaprasad and Rahul Paswan in Bengaluru, Mohi Narayan in New Delhi; Editing by Susan Fenton, Kirsten Donovan)
