Crude oil prices (West Texas Intermediate) were lower on a month-on-month (m-o-m) basis by 5.1%, but were higher by 71% year-on-year (y-o-y). In fact, crude oil prices are currently around the $80 per barrel mark. The current surge can be attributed to a strong winter season in the US, translating into strong demand.
Spread between Arab Light and Arab Heavy was higher in the current month by about $0.5 per barrel, while the spread between Brent and Maya rose by $1.1 per barrel. Our calculated Singapore gross refining margins rose by about $1 per barrel m-o-m, but were lower by $0.8 per barrel y-o-y, driven by a fall in product spreads. On a sequential basis, fall of $0.7 per barrel in diesel spread was more than offset by $3.5 per barrel increase in naphtha spread.
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On a y-o-y basis, only naphtha spreads were higher, while diesel and jet-kero spreads were lower by $11.2 per barrel and $10.5 per barrel, respectively. On a y-o-y basis, the situation worsened for complex refiners on account of falling differential between sweet and sour crude varieties along with lower spreads between heavy and light crude oils.
With lower crude oil prices sequentially, marketing margins for kerosene, diesel and petrol increased on a m-o-m basis. While petrol under-recoveries averaged Rs3 per litre, diesel under-recoveries was at Rs2 per litre. Among cooking fuels, liquefied petroleum gas losses increased to Rs263 per cylinder, while kerosene under-recoveries was lower at Rs17 per litre.
Meanwhile, in its latest monthly report, International Energy Agency (IEA) upgraded global oil demand estimates for 2009 from 84.8 million barrels per day (mbpd) to 84.9 mbpd. For 2010, IEA raised its estimates from 86.2 mbpd to 86.3 mbpd. The Organization of the Petroleum Exporting Countries (Opec) has maintained its estimates for 2009 at 84.31 mbpd. For 2010, Opec has raised its demand estimates from 85.07 mbpd to 85.13 mbpd. Since July, IEA has raised its demand estimates for 2009 and 2010 by 1.1 mbpd each, while Opec has raised by 0.47 mbpd and 0.79 mbpd, respectively.
During December, the Bombay Stock Exchange’s Oil and Gas Index underperformed the Sensex by 1.3%. The under-performance was led by Oil and Natural Gas Corp. Ltd, Reliance Industries Ltd, GAIL (India) Ltd and Gujarat State Petronet Ltd. State-owned oil marketing companies witnessed a strong outperformance owing to fall in crude oil prices and expectations of cash receipts instead of bonds for under-recovery compensation. Essar Oil Ltd and Indraprastha Gas Ltd were other notable outperformers.
Graphics by Yogesh Kumar/Mint