Crude oil prices are expected to remain between $65 a barrel to $70 a barrel in the second half of financial year 2018-2019.

This will be driven by increasing geo-political tensions, OPEC supply cuts and drawdowns in crude oil inventory stocks along with slower growth in the total exploration capital expenditure in the US, according to India Ratings and Research (Ind-Ra).

Ind-Ra is a 100 per cent owned subsidiary of the Fitch Group.

Higher crude oil prices along with higher crack spreads for diesel and kerosene, improved refining complexities, better distillate yields and a strong domestic demand supporting high capacity utilisation, are likely to support the gross refining margins of oil marketing companies for the remainder of the year as well.

Ind-Ra also expects the LNG import volume to go up during the period. This will be despite the rise in international spot prices.

“LNG prices would remain firm above $9 per barrel, driven by a strong demand from China, Japan and Korea. While the incremental city gas distribution (CGD) demand is expected to be met from domestic production, growth in other sectors, especially fertilisers and power, would push LNG import volume up domestically.”

CGD network

CGD network is also likely to expand, with 78 geographical areas approved for issuance out of the 86 in the 9th CGD bidding round.

Around 1.53 million piped natural gas connections and 537 compressed natural gas stations are to be built by September 2020, according to the phase out plan by the Petroleum and Natural Gas Regulatory Board.

This will lead to an estimated 1.7 metric standard cubic metre per day (mmscmd) additional gas volume from the CGD network till September 2020 and 3.6 mmscmd till September 2021.

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