Consumption of fuel, a proxy for oil demand, fell to 18.01 million tonnes in January, which was 3.2 per cent below last month, and 3.9 per cent lower than a year earlier, data from the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Petroleum & Natural Gas showed on Tuesday.
“High oil prices are not good for all developing countries and recent increase in oil prices could have a negative impact on refined product sales in India,” said Refinitiv analyst Ehsan Ul Haq.
But India’s coronavirus vaccine programme could boost travel and bode well for oil consumption for the rest of 2021, Refinitiv’s Ul Haq said.
Benchmark Brent crude oil prices registered a third straight months of gains in January and climbed above $60 a barrel for the first time in a year this month.
The rally in global prices also propelled gasoline prices to record levels in India, Reuters reported last week.
India’s oil minister had also warned that rising oil prices could dampen a global economic recovery from the COVID-19 pandemic.
Diesel consumption, a key parameter linked to economic growth and which accounts for about 40 per cent of overall refined fuel sales in Asia’s third largest economy, declined 2.3 per cent year-on-year to 6.80 million tonnes.
Sales of gasoline, or petrol, rose by about 6.1 per cent from a year earlier to 2.61 million tonnes.
Sales of cooking gas, or liquefied petroleum gas (LPG), increased by about 2 per cent to 2.49 million tonnes, while naphtha sales fell by 10.6 per cent to 1.27 million tonnes.
Sales of bitumen, used for making roads, were 2.9 per cent lower than a year ago, while fuel oil dropped by about 10 per cent last month.