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Indian oil demand rose to a seven-month high 4.62 mb/d in January, higher y/y by 0.28 mb/d. Diesel (+0.1 mb/d y/y) led the way, followed by gasoline demand growth (+76 thousand b/d). Demand should be supported further from February by interest rate cuts and income tax changes providing a boost to consumer spending, and by government efforts to expedite infrastructure projects. Indian state-owned refiners have reported a healthy pick-up in gasoline demand in early February, with northern states clocking in demand growth of 8–12% y/y, which has forced them to tender for gasoline in the spot market. Naphtha demand, having grown strongly in November and December, fell back again in January (-4 thousand b/d y/y). Jet fuel demand rose to 0.19 mb/d in January, higher y/y by 7 thousand b/d, while kerosene demand fell y/y by 13 thousand b/d. Fuel oil demand was steady m/m at 0.12 mb/d in January, flat y/y. LPG demand climbed to a record high amidst sharp declines in cylinder prices.
Refinery runs rose m/m by 0.22 mb/d to 5.1 mb/d, although they contracted y/y for the second consecutive month (-0.2 mb/d). A 0.29 mb/d m/m rise to 0.4 mb/d at Vadinar and a 0.13 mb/d m/m uptick at Kochi to a record 0.36 mb/d led the way, offsetting a 0.14 mb/d m/m decline at Jamnagar, where planned maintenance (which continued into February) led runs to fall below 0.5 mb/d for the first time since early 2015. We expect Indian runs to fall m/m in February owing to planned and unplanned maintenance. Works are set to average 0.28 mb/d over March–May, as Reliance’s works on CDU 1 (domestic refinery) have been pushed back to mid-June. Preparation for BS-VI specs, in force from April 2020, implies heavy refinery works through 2019.