S&P Global Commodity Insights: Monsoon rains, European demand set to keep India's gasoil exports robust
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* "The arrival of monsoon is expected to lead to a dip in domestic gasoil demand, especially from the construction sector and trucking, and we expect that there will be an increase in diesel exports out of India in the third quarter versus the second quarter," said Lim Jit Yang, advisor for Asia-Pacific oil markets at Platts Analytics of S&P Global Commodity Insights.
* According to Platts Analytics, India's diesel exports rose by nearly 15% year on year to an average of nearly 700,000 b/d over the first five months of this year, with substantial volumes heading to Europe in recent months.
* "Indian refineries have been running hard over the past few months to produce sufficient fuel to meet improving domestic demand, and at the same time to capture lucrative export opportunities for distillates as product cracks surged to a record high," Lim of Platts Analytics added.
* India's average run rate for all refinery categories rose to 110% in May from 105% in April, the latest survey by the oil ministry showed, as refiners sought to gain from higher margins and expectations of higher fuel demand in the summer season.
* Average May runs were also above the 93% rate of May 2021, as higher crude prices ensured greater returns from cracks in Asia's third-largest economy. State-owned refineries recorded a 113% run rate in May from 87% in May 2021 and 110% in April. Private refineries recorded a 104% average run rate in May, compared with 102% in May last year and 96% in April.
* High prices may dent local demand
* India's gasoil output rose 3.06% on month to 10.12 million mt, or 2.43 million b/d, in May, PPAC data showed, following an increase in refineries' run rate and strong gasoil cracks that continued to encourage the production of the distillate. On a year-on-year basis, gasoil production in May was up 21.9%.
* In May, the physical FOB Singapore gasoil cracks against front-month cash Dubai averaged $45.31/b, largely steady from an average of $46.02/b over April, S&P Global data showed, reflecting the sustained attractiveness of producing gasoil for export purposes.
* Analysts said India's exports of oil products would continue to remain robust in the foreseeable future, as high retail prices are threatening to dent domestic demand.
India's Gasoil Demand Outlook
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