India's local oil product sales in June nudged up an annual 1.9%, its slowest pace since November, on sluggish demand for auto fuels as better monsoon and price increase crimped demand, indicating industrial output is likely to slow in coming months.
Local oil product sales, a proxy for domestic oil demand in Asia's third-largest oil consumer, rose to 12.10 million tonnes in June, the government data showed.
In May, India's fuel demand rose an annual 5%, the highest jump since January.
The International Energy Agency in its latest report had said India's fuel demand may rise 3.8% in 2012 led by diesel and gasoline.
In June 2010, local gasoline demand rose 12.7% and that of diesel was up 7.1%, as dealers topped up tanks ahead of a fuel price hike, when India also freed up gasoline pricing from government controls.
For a table on India's oil products sales, imports and exports, see India raised diesel and kitchen fuel prices last month as well , but high base of last year diluted the inventory build up with dealers, an Indian Oil Corp official said.
Growth in diesel sales, which make up over a third of refined products consumption, slowed sharply to an annual 2.9% in June versus 10.9% rise in May, as better monsoon reduced demand from farm and construction sectors.
India may use around 5.2% more diesel in 2011 and about the same in 2012, a Reuters survey shows, a little more than half the rate of expected economic growth.
Gasoline sales last month grew an annual 0.5% versus 8% in May, reflecting moderating car sales that clocked slowest pace of growth in June since March 2009.
Indian state-run firms in mid-May raised petrol prices by about 8.6% or 5 rupees a litre.
While India should keep expanding at rates many nations would envy, Asia's third-largest economy faces a period of reduced growth and stubbornly high inflation.
India's central bank raised interest rates by a higher-than-expected 50 basis points on Tuesday, stepping up its fight against persistently high inflation despite slowing growth.
India's industrial output grew at its weakest pace in nine months in May, the latest sign that the rising cost of credit and inflation are acting as brakes on the economy.
India's crude imports rose about 9.2% to 13.67 million tonnes or about 3.34 million barrels per day (bpd) in June.
The data for June includes estimated imports and exports for Reliance Industries's export-focused 580,000 bpd refinery at Jamnagar, in western India.
Diesel exports declined 7.9% in June while petrol exports were up 15.26% from a year ago.
Oil products imports rose 35.21%, while exports rose 10.73% from a year ago.