High crude price pushes up fuel under-recoveries. For 16-30 April, Brent crude was US$124/bbl, up US$1.7/bbl from the previous fortnight, on account of the unrest in the Middle East and North Africa (MENA) region which may trigger supply disruptions incrude oil. Auto-fuel under-recoveries for 1-15 May are likely to be `15.8/litre as losses on diesel rose to `17.2/litre. We estimate an auto-fuel breakeven crude price at US$76.8/bbl, up US$0.5 from previous fortnight due to slight decline in global diesel cracks.
Fuel price hike imminent. With auto-fuel losses skyrocketing, a fuel price hike is imminent post state elections. We expect petrol price to be increased by Rs3-4/litre and diesel price to rise Rs1-2/litre, while cooking fuel price may remain unchanged.
Refining margin strong; complex refiners gain. Refining margin for 16-30 April continued to be strong at US$8.4/bbl due to shutdown of the refining capacity in Japan. Refining margin for 4QFY11 is US$7.4/bbl compared with US$5.5/bbl in 3QFY11, on account of continued strength in middle-distillate cracks. We estimate that margin would average US$4.75/bbl in FY12 and US$5.5/bbl in FY13. The Brent-Dubai spread was strong at US$7.1/bbl, though down US$0.5/bbl from the previous fortnight, adding to complex refiners' margins.
