India's oil demand returned to growth in April, following three months of declines amid a cash crunch caused by the government's demonetization move to tackle corruption, Bloomberg reported on Friday, citing figures by the Oil Ministry's Petroleum Planning and Analysis Cell.
India's fuel consumption increased by 3.3 percent to 16.79 million tons last month. Diesel consumption-which makes up some 40 percent of India's fuel demand-went up 2.8 percent to 6.96 million tons, while gasoline consumption increased by 4.5 percent to 2.09 million tons, figures by the Oil Ministry crunched by Bloomberg showed.
At the beginning of this year, Platts analysts said that India's oil demand growth is expected at 7-8 percent in 2017, outstripping China's demand growth for a third year running. According to Platts Analytics, India's demand is seen growing around 7 percent to 4.13 million bpd this year, compared to a 3-percent growth in Chinese oil demand, which is expected to reach 11.5 million bpd.
The demonetization and the following cash crunch were expected to temporarily dampen demand in the first quarter, or a little longer, Platts said in January.
In its April Oil Market Report, IEA downgraded global oil demand growth for this year, dropping its estimate to 1.3 million barrels per day, putting the blame on weaker-than-expected demand in the first quarter, which was the result of disappointing figures in India, Russia, the United States, Korea, and the Middle East.
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India's demand in April reversed the negative trend from the previous three months, and according to BMI analysts, stronger demand will lead to annual increases in India's crude oil imports for April and May.
"The return of Indian consumption growth over the remainder of 2017 will help support global oil demand growth over the summer," BMI analysts said in an emailed note earlier this week, as quoted by Bloomberg.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More