Oil And Gas Sector Update – GRM, Marketing Margins Weak But Hopeful Of Recovery: ICICI Securities

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Reuters’ Singapore gross refining margin in May 2021-to-date is down 10% month-on-month from 14-month high of $2.7/barrel of oil in April 2021, hit by month-on-month fall in petrol, liquefied petroleum gas and fuel oil cracks.

GRM on May 18, 2021 is sharply lower at just $1.16/barrel of oil.

We estimate Q1 FY22-to date GRMs of Bharat Petroleum Corp., Indian Oil Corp. and Reliance Industries Ltd. to be weak at $0.4-3.5/barrel of oil.

Recovery in diesel cracks, which were pre-Covid-19 at $11.0-14.3/barrel of oil in Q4-Q3 FY20, is key to GRM rising to our FY22E estimate of $3.4-7.0/barrel of oil.

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ICICI Securities Oil downstream Update.pdf


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