Bharat Petroleum Corp. Ltd. reported a profit in the quarter ended June as inventory gains offset the impact of lower sales and weak refining margin.
Global crude oil prices have rebounded after a historic price crash in April. Brent crude—the Asian benchmark—jumped over 80%, registering its best quarterly gains in 30 years. Most of the gains were due to improving oil demand despite the Covid-19 crisis, the OPEC+ agreeing to a production cut and higher consumption post-lockdown in China.
As market price of crude oil rises, refiners like BPCL that bought existing stock at a cheaper rate ended up selling it higher, resulting in inventory gains.
That said, operationally it remained a challenging quarter for the oil retailer. The nationwide lockdown to curb the pandemic nearly wiped out demand for fuel as fewer vehicles plied on the roads. Fuel consumption in India had hit a 13-year-low in April. And while demand is steadily recovering to pre-Covid levels, BPCL’s production and sales took a hit.
- Crude output fell 39% to 5.14 million metric tonnes.
- Sales volume fell 26% to 8.32 million metric tonnes.
“During this quarter, there was lower refinery throughput and revenue from operations, mainly due to lower demand of petroleum products,” BPCL said in its filing. “With gradual reopening of the economy, the corporation expects refinery throughput and revenue from operations will improve and will be at normal levels post Covid-19 impact and removal of complete lockdown restrictions.”
Shares of BPCL closed 0.14% lower ahead of the quarterly results, tracking the benchmark BSE Sensex that fell 0.15%.
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