Indian state retailers’ monthly diesel sales dropped in August, while gasoline consumption rose, according to preliminary sales data, as monsoon season dented construction activity and prompted people to use personal vehicles for commuting.

Fuel demand in India – a proxy of oil consumption in the world’s third-biggest oil importer – typically falls during the four-month monsoon season that starts in June as parts of the country are affected by heavy floods.

The state refiners sold 5.94 million metric tons of diesel last month, a decline of 3.7% from July, while gasoline sales rose 3.4% to 2.83 million tons, the data showed.

India’s strong growth trajectory for fuel demand will resume as weather conditions improve, the International Energy Agency stated in its July report.

The Paris-based agency expects India’s fuel demand to rise by an average 150,000 barrels per day (bpd) in September quarter, ending the year with an average annual increase of 190,000 bpd.

Monsoon rains also hit demand from the agriculture sector as farmers use gasoil-fired generators for irrigation. Diesel sales of state fuel retailers were also affected due to marginally lower fuel prices at outlets of private refiners.

Diesel accounts for about two-fifths of India’s overall refined fuel consumption, and is directly linked to industrial activity in Asia’s third-largest economy.

State retailers Indian Oil Corp IOC.NS, Hindustan Petroleum Corp HPCL.NS and Bharat Petroleum Corp Ltd BPCL.NS own about 90% of the country’s retail fuel outlets.
Source: Reuters (Reporting by Nidhi Verma; Editing by Sherry Jacob-Phillips)