Brent crude strengthened as OPEC deferred its decision to increase production. Besides this, postponement of the decision on fuel price hike has also led to auto-fuel under-recoveries staying high, at Rs12.7/litre, with losses on diesel at Rs14.7/litre. Refining margin remains strong owing to robust middle-distillate cracks.
n No hike in OPEC output pushes up crude price. Brent crude price averaged at US$116.6/bbl during 1-15 June, up US$3.4/bbl from previous fortnight, as OPEC deferred its decision to increase production.
n High under-recoveries continue on delay in fuel price hike. Postponing its decision on fuel price hike has led to auto-fuel under-recoveries for 16-31 June remaining high at Rs12.7/litre. Losses on diesel/petrol during the fortnight stood at Rs15/ Rs2.6 a litre. We estimate auto-fuel breakeven crude at US$79.2/bbl (petrol: US$109/bbl; diesel: US$72/bbl), up US$0.4/bbl from the previous fortnight due to decline in international gasoline cracks.
n Refining margin strong; complex refiners gain. Refining margin for 1-15 June continued to be strong, at US$7.8/bbl, on account of continued strength in middle-distillate cracks. Refining margin for 1QFY12 (till date) has been US$8.8/bbl compared with US$7.4/bbl in 4QFY11. We estimate margin to average at US$4.75/bbl in FY12 and US$5.5/bbl in FY13. The Brent-Dubai spread was strong at US$6.8/bbl, adding to complex refiners' margins.
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.
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