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Energy
India
Crude oil prices: No respite from surge in prices
Global refining margins: Improve led by strong diesel and kerosene cracks
India marketing margins: Higher marketing losses
Crude oil prices: No respite from surge in prices
Crude oil (Dated Brent) prices continued their upward march and crossed US$117/bbl by the end
of the month. The rise was led by—(1) escalating political unrest in Libya, (2) spread of geopolitical
unrest to Algeria and Bahrain, (3) increasing tensions between Israel and Iran, and (4) sharp rise in
speculative positions. We do not rule out further spike in crude oil prices in the event of escalation
of geopolitical unrest in MENA. Spot natural gas price (Henry Hub) remained stable at US$4/mn
BTU in March 2011 versus US$4.1/mn BTU in February 2011. However, spot LNG prices have
increased to US$12.15/mn BTU in the recent week led by high demand from Japan.
Global refining margins: Improve led by strong diesel and kerosene cracks
We compute Singapore complex gross refining margins at US$1.7/bbl in March 2011 versus
US$1.4/bbl in February 2011. The improvement in refining margins was led by expansion
of—(1) diesel cracks to US$21.4/bbl (+US$4.3/bbl mom), (2) kerosene cracks to US$23/bbl
(+US$3.2/bbl mom), (3) gasoline cracks to US$12.1/bbl (+US$0.2/bbl mom) and (4) naphtha cracks
to -US$1.2/bbl (+US$0.9/bbl mom). This was partially mitigated by contraction in fuel oil cracks to
–US$7.7/bbl (-US$2.5/bbl mom). We expect refining margins to remain subdued in the medium
term given supply-demand imbalance. We estimate India refining margins to improve to US$6/bbl
in April 2011 versus US$4.7/bbl in March 2011 led by expansion in fuel oil and diesel cracks.
India marketing margins: Higher marketing losses
We estimate higher marketing losses on auto fuels and cooking fuels in April 2011 due to (1)
increase in global product prices and (2) no change in domestic retail prices. We compute
marketing margins assuming unchanged domestic prices for diesel at –Rs12.5/liter (versus –
Rs8.7/liter in March 2011 and –Rs2.6/liter in FY2011) and for gasoline at –Rs5.9/liter (versus –
Rs3.2/liter in March 2011 and –Rs2.2/liter in FY2011). We compute subsidy losses on LPG and
kerosene at Rs370/cylinder and Rs28.2/liter for April 2011 versus Rs323/cylinder and Rs24.9/liter
in March 2011.
We have included some key exhibits here. For more details, please refer our India Energy Monthly,
April 2011.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Energy
India
Crude oil prices: No respite from surge in prices
Global refining margins: Improve led by strong diesel and kerosene cracks
India marketing margins: Higher marketing losses
Crude oil prices: No respite from surge in prices
Crude oil (Dated Brent) prices continued their upward march and crossed US$117/bbl by the end
of the month. The rise was led by—(1) escalating political unrest in Libya, (2) spread of geopolitical
unrest to Algeria and Bahrain, (3) increasing tensions between Israel and Iran, and (4) sharp rise in
speculative positions. We do not rule out further spike in crude oil prices in the event of escalation
of geopolitical unrest in MENA. Spot natural gas price (Henry Hub) remained stable at US$4/mn
BTU in March 2011 versus US$4.1/mn BTU in February 2011. However, spot LNG prices have
increased to US$12.15/mn BTU in the recent week led by high demand from Japan.
Global refining margins: Improve led by strong diesel and kerosene cracks
We compute Singapore complex gross refining margins at US$1.7/bbl in March 2011 versus
US$1.4/bbl in February 2011. The improvement in refining margins was led by expansion
of—(1) diesel cracks to US$21.4/bbl (+US$4.3/bbl mom), (2) kerosene cracks to US$23/bbl
(+US$3.2/bbl mom), (3) gasoline cracks to US$12.1/bbl (+US$0.2/bbl mom) and (4) naphtha cracks
to -US$1.2/bbl (+US$0.9/bbl mom). This was partially mitigated by contraction in fuel oil cracks to
–US$7.7/bbl (-US$2.5/bbl mom). We expect refining margins to remain subdued in the medium
term given supply-demand imbalance. We estimate India refining margins to improve to US$6/bbl
in April 2011 versus US$4.7/bbl in March 2011 led by expansion in fuel oil and diesel cracks.
India marketing margins: Higher marketing losses
We estimate higher marketing losses on auto fuels and cooking fuels in April 2011 due to (1)
increase in global product prices and (2) no change in domestic retail prices. We compute
marketing margins assuming unchanged domestic prices for diesel at –Rs12.5/liter (versus –
Rs8.7/liter in March 2011 and –Rs2.6/liter in FY2011) and for gasoline at –Rs5.9/liter (versus –
Rs3.2/liter in March 2011 and –Rs2.2/liter in FY2011). We compute subsidy losses on LPG and
kerosene at Rs370/cylinder and Rs28.2/liter for April 2011 versus Rs323/cylinder and Rs24.9/liter
in March 2011.
We have included some key exhibits here. For more details, please refer our India Energy Monthly,
April 2011.
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