After Q3 gains, oil marketing companies to report big inventory losses in Q4

India’s oil marketing companies (OMCs) ,BPCL, HPCL & IOC are likely to book heavy inventory losses in the March quarter of 2020, even as more than halving of crude prices since January 1 could positively impact their gross refining margins (GRMs). The OMCs are likely to see inventory loss of $5.6-8/barrel in Q4FY20 given that they bought crude at an average price of $65-$67 in the December quarter, according to analysts.

The OMCs had reported big inventory gains for the third quarter of the current fiscal ? Rs 1,608 crore by IOC and Rs 343 crore by HPCL. Industry experts estimated OMCs’ GRMs in Q4FY20-to-date at $1.0-3.9/bbl as Singapore refining margins improved around 5% sequentially. The refining margins were also aided by gains from refinery transfer price (RTP) being higher than spot price of $5.1-5.6/bbl. However, these gains will be more than nullified by the inventory losses in the quarter.