ricing of petrol and diesel should account for the expenditure incurred by oil marketing companies on BS VI upgradation, M K Surana, Chairman at Hindustan Petroleum (HPCL), the country’s third largest fuel retailer, has said. In a media interaction Wednesday he talked about the impact of falling crude rates on domestic price of fuel, impact of corona virus’ spread on petroleum product cracks, softening freight rates and the drop in spot oil cargoes. Edited Excerpts..
How is Coronavirus outbreak impacting global petroleum product cracks?
Crude prices are going down as people are worried about demand destruction. The news of OPEC holding discussions on extending production cuts had a limited impact on oil prices. Product prices normally follow lower crude prices. So, in the immediate future it will support product cracks. Lower fuel prices reduce the cost and, to that extent, there will be an upside. While stable lower crude prices are good but a falling crude oil price will lead to inventory losses. Any increase in oil prices will result in inventory gains and lower fuel prices should help in refinery GRMs. Also, the product cracks are expected to improve, However, it still depends on the demand and the intensity of the fall-out. People are still not clear on the impact of the virus and its uncharted territory right now. We will have to wait and watch.
Have the spot prices of crude oil cargoes and freight rates decreased due to slowdown in demand and exports from China?
The premiums on spot oil cargoes have come down and the premium on freight rates has also come down. The company will explore all the opportunities which will benefit us but the oil we are processing today was bought some time back. Lower prices do help us.