The operating environment for the refining sector remained muted during the December quarter. Refining overcapacity and sluggish demand has led to range-bound margins. Singapore gross refining margin (GRMs), a measure of profitability, remained particularly weak during October and November, and then recovered considerably in December. GRMs improved in December mainly on account of improvement in non-auto fuel cracks.

Still, Singapore GRMs for the quarter ended December declined by 20.4% compared with the September quarter and 33.8% compared with the year-ago quarter. Motilal Oswal maintains that the medium-term GRM outlook continues to remain subdued, as well as volatile, due to occasional bunching up of shutdowns.