GRMs and Petroleum product spreads

GRMs continued to reap benefits from lower crude oil prices during last week.
WTI crude prices averaged at US$69.9/bbl during the week gone by. Petroleum
product crack spreads remained more or less flattish on a WoW basis, except
Naphtha-Crude crack spreads, which marched into a negative territory,
averaging at US$(0.9)/bbl. GRMs remained stable during last week averaging at
US$1.9/bbl. Henry Hub spot Natural gas prices have been hovering at about
US$4/mmbtu since the past few weeks. However, sudden drop in naphtha prices
led to Naphtha-Henry hub spot Natural gas spread to drop in single digit at
US$9.0/mmbtu. We believe that the fall in crude prices and recent come back of
the GRMs will aid the domestic refiners during the current quarter. However,
possibility of inventory losses due to sudden drop in crude prices cannot be ruled
out.

Jet Bloomber Naphtha -

Gasoline - Diesel - Kerosene Naphtha - g Dubai Henry hub
Crude Crude - Crude Crude Cracking natural gas
Daily Spread Spread Spread Spread GRMs Spread
US$/
US$/ bbl US$/ bbl US$/ bbl US$/ bbl US$/ bbl mmbtu
28-May-10 7.4 10.0 11.1 (1.9) 1.0 9.0
27-May-10 7.4 10.0 11.1 (1.9) 1.0 9.1

Weekly
28-May-10 8.6 10.4 11.0 (0.9) 1.9 9.0
21-May-10 8.5 10.7 10.8 0.9 1.9 10.2
14-May-10 7.2 11.1 10.9 0.5 1.1 11.2
7-May-10 8.7 11.3 11.3 (0.1) 0.6 12.1

Monthly
30-Apr-10 11.1 11.4 11.3 (0.7) 1.3 11.8
31-Mar-10 13.5 10.5 10.1 2.7 2.4 10.2
28-Feb-10 12.4 8.6 8.4 1.4 2.1 8.8
31-Jan-10 11.4 7.4 9.0 2.6 1.6 9.2

YTD
28-May-10 11.4 9.7 10.0 1.3 1.8 10.3

1QCY10 12.4 8.8 9.2 2.3 2.1 9.4

4QCY09 5.2 6.2 7.3 (1.3) (0.5) 10.0
3QCY09 9.0 6.9 7.1 (1.5) 0.8 9.5
2QCY09 9.5 7.1 7.5 (2.9) 1.0 7.0
1QCY09 10.6 8.6 10.9 (0.4) 4.0 3.8
Source: Bloomberg, PL Research