India’s consumption of petroleum products increased by 6.4% year-on-year in January, based on data from the Petroleum Planning and Analysis Cell. This looks decent, considering that growth was relatively soft in the previous five months, and also keeping in mind that in January 2018, consumption had increased by a robust 12.4% year-on-year. So the growth in January has come off a relatively high base.

Demand growth was seen across various products but, going ahead, it will be interesting to watch whether the overall demand growth seen in January persists. “With oil prices rising again, economic activity soft and a stiff base awaiting, growth may moderate in the coming months," point out analysts from Jefferies India Pvt. Ltd.

For state-run oil marketing companies, margins remain critical from an earnings perspective. Here, the benchmark Singapore gross refining margin has dropped further from the $4.3 per barrel seen in the December quarter. “With retail prices likely to pause ahead of elections, auto fuel marketing margins could normalize down from their all-time highs, especially if crude prices spike further," said Jefferies India.

These factors may weigh on sentiments for oil marketing companies including Bharat Petroleum Corp. Ltd, Hindustan Petroleum Corp. Ltd and Indian Oil Corp. Ltd.

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