High crude price pushes up fuel under-recoveries. For 16-30 April, Brent crude was US$124/bbl, up US$1.7/bbl from the previous fortnight, on account of the unrest in the Middle East and North Africa (MENA) region which may trigger supply disruptions incrude oil. Auto-fuel under-recoveries for 1-15 May are likely to be `15.8/litre as losses on diesel rose to `17.2/litre. We estimate an auto-fuel breakeven crude price at US$76.8/bbl, up US$0.5 from previous fortnight due to slight decline in global diesel cracks.
Fuel price hike imminent. With auto-fuel losses skyrocketing, a fuel price hike is imminent post state elections. We expect petrol price to be increased by Rs3-4/litre and diesel price to rise Rs1-2/litre, while cooking fuel price may remain unchanged.
Refining margin strong; complex refiners gain. Refining margin for 16-30 April continued to be strong at US$8.4/bbl due to shutdown of the refining capacity in Japan. Refining margin for 4QFY11 is US$7.4/bbl compared with US$5.5/bbl in 3QFY11, on account of continued strength in middle-distillate cracks. We estimate that margin would average US$4.75/bbl in FY12 and US$5.5/bbl in FY13. The Brent-Dubai spread was strong at US$7.1/bbl, though down US$0.5/bbl from the previous fortnight, adding to complex refiners' margins.
Safe Harbor Statement:
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
Nothing in this article is, or should be construed as, investment advice.
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