Petrol margins turn positive as OMC fuel marketing losses ease in Q2FY27: Report

Fuel marketing losses of state-run oil marketing companies (OMCs) narrowed sharply in the September quarter, helped by lower crude oil prices and the full impact of retail fuel price hikes, according to Emkay Research.

Fuel marketing losses of state-run oil marketing companies (OMCs) narrowed sharply in the September quarter, helped by lower crude oil prices and the full impact of retail fuel price hikes, according to Emkay Research. However, diesel sales continued to remain loss-making during the quarter, the research firm said in its oil and gas sector preview.

Emkay estimated that petrol marketing margins, excluding the impact of the windfall levy, improved to Rs 2.9 per litre in Q2FY27 from a loss of Rs 12 per litre in the previous quarter. Diesel marketing losses also narrowed to Rs 16.7 per litre from Rs 32 per litre in the previous quarter.

The improvement comes after OMCs faced significant pressure on their fuel marketing margins in the June quarter due to higher crude oil prices. “Marketing losses narrowed,” Emkay said, attributing the improvement to lower crude prices and the full impact of retail fuel price hikes.

Losses on domestic LPG sales also declined during the quarter. Under-recoveries on LPG narrowed to around Rs 290 per cylinder, according to the report. Aviation turbine fuel (ATF) margins also improved after regular price increases were implemented from July, Emkay said.

The earnings outlook for refiners is also being supported by inventory gains. Brent crude averaged around USD 97 per barrel during the quarter, down 6 per cent from the previous quarter. However, crude prices ended the quarter at around USD 120 per barrel, sharply higher than about USD 72 per barrel at the end of Q1.

Emkay said the sharp rise in crude prices towards the end of the quarter could result in “significant inventory gains” for some refiners. Overall, the improvement in fuel marketing margins, along with lower LPG under-recoveries and better ATF margins, is expected to provide support to OMC earnings in Q2FY27. (ANI)