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Crude to remain priced between $55-$65 a barrel in 2019-2020

The price of crude oil will remain range-bound between $55-$65 a barrel during the financial year 2019-2020.

This price range will be driven by a rise in supply from the US, which would be offset, to some extent, by the recent production cut announced by OPEC+, the continued debt crisis in Venezuela and the limited clarity on sanctions imposed on Iran, according to Ind-Ra.

“Thus, the range-bound crude price would limit large inventory gains or losses,” an Ind-Ra statement added.

Commenting on refining margins, Ind-Ra said, “The new regulation introduced by the International Maritime Organization against the use of high sulphur fuel oil is likely to lead to a shift in the product slate of refiners towards the production of more low sulphur fuel oil to meet new demand. This is likely to increase the crack spreads of products such as diesel and further reduce the heavy sulphur fuel oil spread.”

“Indian refiners are likely to benefit from a higher diesel crack spread, given the fuel has a 40 per cent share in the overall product slate. Meanwhile, reduced high sulphur fuel oil spread could have some negative implications on refining margins,” Ind-Ra added.
Source: The Hindu Business Line

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