GRMs of IOCL, HPCL and BPCL at four fiscal low

Gross refining margin is what company earns from turning every barrel of crude oil into fuel

State-run oil marketing firms -- IndianOil Corporation (IOCL), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) -- are operating at gross refining margins which are the lowest in the last four fiscals, said HDFC Securities in its research.

Gross refining margin (GRM) is what the company earns from turning every barrel of crude oil into fuel.

IOCL's GRM has slipped to $0.09 per barrel during April-September 2014, against $5.19 per barrel in April-September 2013.

HPCL has seen its GRM drop to $2.09 per barrel between April-September 2014, against $3.27 per barrel in April-September 2013. BPCL's GRM stood at $2.36 per barrel during April-September 2014 against, $4.38 per barrel in April-September 2013.

Singapore gross refining margins (GRMs) have increased quarter-on-quarter from $4.8 per barrel in second quarter of FY15 to $6.3 per barrel in third quarter of FY15.

Oil prices have fallen 60 per cent from their June 2014 peak. Rising production, particularly US shale oil and weaker demand in Europe and Asia have driven the prices down. Brent and US WTI crude oil prices fell to their lowest levels in almost six years as OPEC producers decided not to cut output to tackle a glut in the market.

For the upstream companies decline in crude oil prices and stronger rupee will have negative impact on gross realization. However,fall in subsidy burden will partially compensate.

Gross crude oil under-recoveries are estimated to decrease quarter-on-quarter from Rs 22,419 Crore in second quarter of FY15 to Rs 15,400 crore in the third quarter of FY15 on account of deregulation of diesel prices and decline in crude oil prices.

Company	April-Sept 2013 /bbl	April-Sept 2014 / bbl
IOCL	$5.19	$0.09
BPCL	$4.38	$2.36
HPCL	$3.27	$2.09