Due to falling global oil prices, oil marketing companies in Pakistan are facing the grim prospect of huge inventory losses, going forward.
“The sharp deterioration in oil prices by around 12pc during the quarter ending September 30 (1QFY15) over the previous year and the consequent reduction in petroleum prices were the prime reasons for the realisation of inventory losses for Attock Petroleum Limited (APL) in the three-month period,” said Muhammad Affan Ismail, oil and gas analyst at BMA Capital.
In a research report last Thursday, Hassan Raza, who follows the energy sector for Taurus Securities, asserted that “the significant drop of 35pc in global oil prices from the recent peak and the resulting reduction in POL product prices, especially of high speed diesel (HSD) and furnace oil, has unnerved investors, depicted by the 18pc slide in the market capitalisation of the oil and gas stocks in recent weeks”.
He says investors are concerned about reduced margins on furnace oil sales, together with sizable inventory losses expected in the quarter ending December 31.
