India’s crude oil demand is expected to grow at 8 per cent sequentially to 5.35 million barrels per day (mb/d) during October-December 2022 helped by positive manufacturing activity and growing consumer confidence.

According to OPEC’s monthly oil market report for October, the demand for oil by the world’s third largest energy consumer is likely to grow by 1.1 per cent quarter-on-quarter to 5.41 mb/d during January-March of 2023 calendar year.

“India’s oil demand outlook in Q4 2022 is expected to continue rising on the back of strong GDP growth of 6.5 per cent and positive manufacturing activity. An expected rise in consumer confidence will likely support mobility and industrial product demand. Furthermore, the post-monsoon Kharif harvesting season and construction activity are also expected to support demand growth. Accordingly, oil demand is expected to grow at 0.3 mb/d, in Q4 2022 amidst economic and social activity recovery,” OPEC said.

Outlook

Distillates are expected to be supported by harvesting, construction and manufacturing activity in October. Additionally, annual traditional festivities and an influx of travellers will likely support mobility and boost gasoline demand, and improvements in air travel will aid jet/kerosene demand. Finally, rising natural gas prices will likely lead to gas-to-oil switching in power generation and the industrial sector, thus improving the demand for fuel oil and distillates, it added.

The oil producing countries group noted that India’s oil demand is expected to remain on a positive trajectory, growing on average at 0.2 mb/d on an annual basis in Q1 2023.

“In Q1 23, gas-to-oil switching is expected to continue. Similarly, Zaid crops are sown and harvested between March and July. Given these factors combined with healthy GDP growth of 5.6 per cent, oil demand is expected to grow by 0.2 mb/d Y-o-Y. The improvement in demand growth will likely be aided by mobility and steady manufacturing and construction demand for distillates. Finally, the residential and petrochemical sectors’ demand for light distillates will remain steady amidst the aviation sector’s demand for jet/kerosene,” it added.

Import levels

OPEC said that India’s crude imports fell to 4.1 mb/ d in August 2022, following strong performance seen over the last four months, but remained broadly in line with seasonal levels.

“Looking ahead, crude imports are expected to increase in September, with Russian inflows of around 1 mb/d. Meanwhile, product imports are also seen higher amid increased inflows of gasoline and fuel oil,” it added.

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