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Energy
India
Crude oil prices: Continue to rise in January
Global refining margins: Improve led by strong diesel cracks
India marketing margins: Higher marketing losses
Crude oil prices: Continue to rise in January
Crude oil prices continued to rise and crossed US$100/bbl by the end of the month. The rise was
led by—(1) supply concerns stemming from disruptions at Norway and Alaska, (2) growing
concerns on Egypt unrest spreading to other oil-producing countries and (3) better-than-expected
economic data in the US. We expect crude oil prices to soften in the near term given (1)
comfortable demand-supply balance, (2) large OPEC spare capacity of over 5 mn b/d despite
slippages in new projects and (3) impact of these outages to fade away by February 2011. Spot
natural gas price (Henry Hub) increased to US$4.5/mn BTU in January 2011 versus US$4.2/mn BTU
in December 2010.
Global refining margins: Improve led by strong diesel cracks
We compute Singapore complex gross refining margins at US$1.6/bbl in January 2011 versus
US$0.8/bbl in December 2010. The improvement in refining margins was led by expansion in
product cracks—(1) gasoline cracks to US$13.8/bbl (versus US$12.9/bbl in December 2010), (2)
diesel cracks to US$15.6/bbl (versus US$13.5/bbl in December 2010) and (4) kerosene cracks to
US$17.2/bbl (versus US$14.4/bbl in December 2010). Naphtha cracks contracted to US$2.8/bbl
(versus US$4.4/bbl in December 2010). We expect refining margins to remain subdued in the near
term given supply-demand imbalance. We estimate India refining margins to improve to
US$4.5/bbl in February 2011 versus US$4.1/bbl in January 2011.
India marketing margins: Higher marketing losses
We estimate higher marketing losses on auto fuels and kerosene in February 2011 due to increase
in global product prices. However, subsidy losses on LPG declined led by a sharp decline in global
LPG prices. We compute marketing margins assuming unchanged domestic prices for diesel at –
Rs6.2/liter (versus –Rs4.6/liter in January 2011 and +Rs0.9/liter in FY2010) and for gasoline at –
Rs1.8/liter (versus –Rs1.6/liter in January 2011 and –Rs2.9/liter in FY2010). We compute subsidy
losses on LPG and kerosene to be Rs342/cylinder and Rs22.2/liter for February 2011 versus
Rs398/cylinder and Rs20.5/liter in January 2011.
We have included some key exhibits here. For more details, please refer our India Energy Monthly,
February 2011.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Energy
India
Crude oil prices: Continue to rise in January
Global refining margins: Improve led by strong diesel cracks
India marketing margins: Higher marketing losses
Crude oil prices: Continue to rise in January
Crude oil prices continued to rise and crossed US$100/bbl by the end of the month. The rise was
led by—(1) supply concerns stemming from disruptions at Norway and Alaska, (2) growing
concerns on Egypt unrest spreading to other oil-producing countries and (3) better-than-expected
economic data in the US. We expect crude oil prices to soften in the near term given (1)
comfortable demand-supply balance, (2) large OPEC spare capacity of over 5 mn b/d despite
slippages in new projects and (3) impact of these outages to fade away by February 2011. Spot
natural gas price (Henry Hub) increased to US$4.5/mn BTU in January 2011 versus US$4.2/mn BTU
in December 2010.
Global refining margins: Improve led by strong diesel cracks
We compute Singapore complex gross refining margins at US$1.6/bbl in January 2011 versus
US$0.8/bbl in December 2010. The improvement in refining margins was led by expansion in
product cracks—(1) gasoline cracks to US$13.8/bbl (versus US$12.9/bbl in December 2010), (2)
diesel cracks to US$15.6/bbl (versus US$13.5/bbl in December 2010) and (4) kerosene cracks to
US$17.2/bbl (versus US$14.4/bbl in December 2010). Naphtha cracks contracted to US$2.8/bbl
(versus US$4.4/bbl in December 2010). We expect refining margins to remain subdued in the near
term given supply-demand imbalance. We estimate India refining margins to improve to
US$4.5/bbl in February 2011 versus US$4.1/bbl in January 2011.
India marketing margins: Higher marketing losses
We estimate higher marketing losses on auto fuels and kerosene in February 2011 due to increase
in global product prices. However, subsidy losses on LPG declined led by a sharp decline in global
LPG prices. We compute marketing margins assuming unchanged domestic prices for diesel at –
Rs6.2/liter (versus –Rs4.6/liter in January 2011 and +Rs0.9/liter in FY2010) and for gasoline at –
Rs1.8/liter (versus –Rs1.6/liter in January 2011 and –Rs2.9/liter in FY2010). We compute subsidy
losses on LPG and kerosene to be Rs342/cylinder and Rs22.2/liter for February 2011 versus
Rs398/cylinder and Rs20.5/liter in January 2011.
We have included some key exhibits here. For more details, please refer our India Energy Monthly,
February 2011.
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