OMCs well placed as there is growth potential in new avenues and a surety of existing cash: MK Surana
MK Surana, Former CMD, HPCL, says crude below $80 and the cracks at $13 for HSD and $11 for MS, make OMCs well placed on overall setup. Also, many of these OMCs are going on a new path. OMCs are in a stage where there is a growth potential with a surety of the existing cash. Of course, the overhangs on the pricing part continue to be there, the possibility or not possibility of some interventions. Pure EV play may take some more time and the hybrid may be more common in the near future to come and that augurs well for the OMCs.
How do you see the outlook for oil marketing companies? On the one hand, Brent is continuously under check, under $80 now and on the other hand, these OMCs are transforming beyond just being distributors of traditional fuel as well.
MK Surana: The stage looks good as of today because the crude is below the psychological mark of $80. The global demand weakness as per many of the agencies who forecast is getting moderated from all the three agencies who have been doing IEA, EIA, or OPEC. The Indian demand is good on the overall while the global demand is lower. People have started recognising the weaknesses in China's demand growing in the current phase.
On the other hand, there is uptick in the GRMs, like the Singapore GRM is around $5 now in August in these 20-25 days, compared to $4.6 in Q2 or $3.5 in Q1. The diesel and petrol cracks are reasonably okay, $13 on HSD and around $11 on MS. So, all these things put together makes a good setting for the oil marketing companies. Crude below $80
