India Transport Fuel Demand Likely to Fall in June: Morgan Stanley

In May, an increase in India’s road fuel demand offset weaker jet fuel and naphtha consumption, according to Morgan Stanley based PPAC data cited by Bloomberg.

• Transportation fuel demand “is likely to decline in June, as the monsoon season has a dampening effect on travel, construction and agricultural activities.”
• Total oil demand in May was 5.32mb/d and flat both month-on-month and year-on-year. Gasoline demand rose 2% y/y to a record 0.98mb/d while diesel demand rose 2% y/y to 2.1mb/d.

• Gasoline and diesel consumption was boosted by “increased mobility around the election and a healthy economy stimulated more road transport.”
• Diesel demand was supported by strong manufacturing and industrial activity and healthy road freight.
• Jet fuel demand showed the first m/m decline for 11 months, but was 20kb/d (or 11%) higher y/y. “We may see a pick-up in jet fuel demand next month,” driven by international flights.
• Fuel oil demand rose 10kb/d m/m, but down 15kb/d (or 12%) y/y.
• Naphtha demand fell by 40kb/d m/m and down by 30kb/d (or 8%) y/y.