India’s oil products demand growth will pick up after weak H1

Singapore — India’s oil products demand in the second half of 2019 is likely to stage a modest recovery from H1 levels on expectations that clarity on government policies post the federal elections would help auto, manufacturing and agriculture sectors to recover. A sharp slowdown in India’s auto demand on the back of a slowdown in economic growth has taken a toll on India’s oil demand, pulling down overall oil products consumption growth to 1% year on year in the first half of 2019. “Going forward into the second half of this year, vehicle sales should recover as the economy improves, coupled with more certainty over new policies and tax rates after the elections,” S&P Global Platts Analytics said in a research note. Platts Analytics expects that GDP growth will soon regain momentum, as the central bank had begun to loosen up the monetary policy by cutting interest rates. The government also has plans to improve the country’s infrastructure and stimulate the economy. It expects oil demand to pick up, with a year-on-year growth of 235,000 b/d in H2 2019, taking the whole year average to 170,000 b/d in 2019, a 3.5% growth over 2018. In the January-June period, demand for diesel, which accounts for the biggest share in the oil products basket, rose by only 2.8% year on year to 43.8 million mt from 42.6 million mt a year earlier. As a result, overall oil products demand grew marginally to 108 million mt from 107 million mt in the same year-ago period. “Gasoil demand growth slowed sharply as motorists increasingly turned to gasoline vehicles, while demand from other sectors had been dampened by a slowing economy,” Platts Analytics said.