Fuel Demand Falls The Most In Over 14 Years

India's fuel consumption fell 6.1 percent in August, its fastest rate of decline since April 2003, as heavy rainfall across the country cut the use of diesel for irrigation pumps and curbed demand for auto fuels.

Consumption of fuel, a proxy for oil demand in the world's third biggest oil consumer, totalled 15.75 million tonnes in August, data from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry showed on Tuesday.

Fuel demand was down for the third straight month in August.

Sale of gasoline, or petrol, was 0.8 percent lower from a year earlier at 2.19 million tonnes, while that of diesel declined 3.7 percent.

More than half of India's population is employed in the farm sector, which depends on gasoil to fuel the pump mechanisms required to irrigate land.

"In August typically India's fuel consumption declines because of heavy rains, which dent demand for fuel from transport, industries and mining sectors," said Tushar Tarun Bansal, director at consultancy Ivy Global Energy.

Many parts of the South East Asian nation were also hit by floods, which limited mobility and reduced demand for petrol and diesel.

Increased connectivity to grids and improved electricity production has also curtailed demand for diesel-fired generators.

Cooking gas or liquefied petroleum gas (LPG) sales increased 11.8 percent to 2.06 million tonnes as the government continued with replacement of kerosene with the cleaner fuel.

The country's top refiner Indian Oil Corporation Ltd had shut a naphtha cracker at its Panipat refinery in India for maintenance last month, cutting the country's Naphtha consumption by about 7.6 percent to 1.06 million tonnes.

Sales of bitumen, used for making roads, were up 8.5 percent, while fuel oil use fell 6.9 percent.