OMCs continue to face petrol, diesel losses despite easing crude prices: Jefferies

Oil marketing companies (OMCs) continue to incur losses on the sale of petrol and diesel, although the extent of these losses has narrowed following a decline in crude oil prices, according to a report by brokerage firm Jefferies.Marketing losses on petrol have fallen to Rs 12 per litre, while those on diesel have eased to Rs 27 per litre, based on 15-day average pricing, the report said.In October, the corresponding losses stood at Rs 22 per litre for petrol and Rs 28 per litre for diesel.Jefferies attributed the improvement to a decline in the Indian crude basket price, which has eased to $97 per barrel from $120 per barrel in October."With the Indian crude basket price easing to $97/ bbl ($120/bbl in Oct-26), the current losses on petrol/diesel have come down to Rs12/27 per liter (Rs22/28 in Oct-26)," the report said.Despite the reduction in losses, marketing margins on both fuels remain in negative territory, indicating continued pressure on OMCs' fuel marketing operations. Jefferies noted that petrol and diesel margins had remained largely negative through much of 2026, with losses widening during periods of higher crude prices.Crude supply improves, but freight rates remain highThe report also highlighted an improvement in global crude supply conditions. Crude oil exports from the Middle East have returned to pre-war levels, while Saudi Arabia's crude production rose in October to its highest level in four years.Physical premiums have also fallen to zero. However, freight rates remain very elevated, while diesel spreads continue to stay above $80, adding to pressure in the oil market.On the gas front, spot liquefied natural gas (LNG) prices averaged $31 per million British thermal units (mmbtu), down 2% week-on-week. Jefferies noted that domestic affordability remained stretched at current price levels.European Union gas storage stood at 72%, compared with 82% during the same period last year. With colder weather reducing storage levels, the brokerage expects gas prices to remain elevated as the winter season approaches.Petrochemical margins improveThe report also pointed to an improvement in petrochemical margins over the past fortnight.A sharp decline in naphtha prices, alongside firm prices of polyethylene (PE) and polypropylene (PP), has widened spreads in the petrochemical segment.Overall, while lower crude prices have reduced the losses OMCs incur on petrol and diesel sales, their fuel marketing margins remain negative. Elevated freight rates and diesel spreads continue to weigh on the broader oil market, according to Jefferies.