Indian oil demand for March hit a strong 5.1% growth rate y-o-y. This was the second highest rate (after February) since November last year. Diesel oil demand grew the most, by 10%, adding another 0.13 mb/d to the total diesel consumption pool. India consumes 1.5 mb/d of diesel, and this is the most consumed petroleum product in the country. Although diesel is consumed mostly by the transportation sector, large amounts of it are also used by the industrial and agricultural sectors. Due to the seasonality and the competing price of natural gas, Indian consumption of fuel oil is on the decline. It plunged by 26% in March alone.
LPG and gasoline are the most consumed oil products after diesel, making up for 14% and 11% of the country’s total oil demand. The retail pricing mechanism is still a hot issue in India, providing a key to future demand estimates. Although India has deregulated retail prices for some petroleum products, the government has been hesitant to allow oil companies to pass hikes in international oil prices to end-users. This move has been objected to by oil companies and is, to a certain degree, affecting oil demand positively. For 2012, India’s oil demand is expected to grow by 0.12 mb/d y-o-y.
The Indian automobile market faced moderate growth of just 4% during 2011, after solid growth of 31% during 2010. This resulted from high fuel prices and surging loan rates. For the current year, according to the Society of Indian Automobile Manufacturers, domestic passenger car sales increased by 23% during March 2012 y-o-y. This was the highest rate of growth over the last ten months and the fifth consecutive month of growth. Discounts, lower interest rates, increased customer liquidity and generally improved sentiment were some of the factors behind these strong increases, which occurred despite the high fuel prices.
Indonesia is the second-largest oil-consumer in Other Asia, after India, and its economic activity calls for more oil. Demand in February rose by a sharp 9.1% y-o-y, to average 1.3 mb/d. Diesel and gasoline consumption grew strongly, each adding 50 tb/d to total demand. As for the whole year, oil demand is forecast to inch up by 1.6%. Given the healthy economies in most of Other Asia, the region’s oil demand growth is estimated at 0.2 mb/d y-o-y.