Energy: Yet another month of soft demand, refining remains a challenge for OMCs


Energy: Yet another month of soft demand, refining remains a challenge for OMCs

India’s oil demand was flattish in May after revisions showed that it actually fell in April. Indeed, demand has slowed sharply in recent months despite a benign base, with petrol the only bright spot for now.

Even so, margins matter more for the OMCs where marketing has rebounded smartly even as refining remains challenging with rising capex and subsidy dues also weighing on cashflow. We prefer the cheaper ONGC & Oil India instead, therefore, as also Gail & PLNG.

Demand: India’s oil demand in May rose just 59kbpd (flat y-o-y in tonnage). In turn, this has left 2019 demand averaging just 137kbpd with Jun/Jul, when a stiff base awaits, likely to be modest too, esp. if the elections were providing an uplift. Read More

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