Dubai complex refining margins averaged $4.4 (Rs200) per barrel in the 1-15 January fortnight, higher than the previous fortnight. This is a significant jump from average margins of $1.9 in the third quarter and $3.1 in the second quarter. While temporary refinery outages in Vietnam and Indonesia helped gasoline margins, a cold snap in Europe helped a draw down of middle distillates, specially pulling up gasoil margins.
The Brent-Dubai spread averaged $0.3 per barrel for the 1-15 January fortnight, slightly improving over the earlier fortnight. The discount of the average price of Duri-Widuri to Brent stayed flat at around 1%.
Based on average international gasoil and petrol prices for 1-15 January, under-recoveries for 16-31 January would be Rs4.50 per litre (petrol at Rs5.60, diesel at Rs4.20). Losses on liquefied petroleum gas and kerosene for January would be Rs261 per cylinder and Rs17.50 per litre, respectively. We estimate break even crude prices at $65 for auto fuels (down $1 month-on-month) and $29 for cooking fuels (down $1 month-on-month).
For the 1-15 January fortnight, gas prices averaged $5.7 per million British thermal units, flat compared with the previous fortnight and the third quarter average. The forward curve as of 15 January looks slightly more bearish for the long term than it did a few months back. Short-term prices pared some gains in the last week on reports that the winter was not as harsh as expected.