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HPCL, BPCL, IOC shares gain up to 7% after crude oil prices cool off
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Summary
The rally in OMC stocks was seen after crude oil prices experienced a third consecutive day of decline on Wednesday, fueled by growing optimism surrounding a potential ceasefire agreement in the Middle East. Additionally, the increase in crude inventories and production within the US, the world’s largest oil consumer, further contributed to the downward trend in oil prices.
Shares of India’s state-run oil refiners — Hindustan Petroleum Corporation Ltd. (HPCL), Bharat Petroleum Corporation Ltd. (BPCL) and Indian Oil Corporation Ltd. (IOC) — are trading with gains of up to 7% on Thursday.
After gaining over 30% so far this year, shares of HPCL are up another 7% today, while those of BPCL are up 40% this year already. IOC shares rose more than 2% in today’s trade.
The rally was seen after crude oil prices experienced a third consecutive day of decline on Wednesday, fueled by growing optimism surrounding a potential ceasefire agreement in the Middle East. Additionally, the increase in crude inventories and production within the US, the world’s largest oil consumer, further contributed to the downward trend in oil prices.
HPCL, BPCL and Indian Oil were recently downgraded by global broking firm CLSA, who has reiterated its ‘Sell’ recommendation on all three companies.
“One should expect a little bit of negative reaction without a doubt, specifically on companies with dominance of marketing sales like HPCL. But I would look at this opportunity to sort of enter the stock and build positions because we believe that the business case doesn’t get hampered as a result of these price cuts,” Probal Sen of ICICI Securities had said earlier in March 2024.
Brent crude futures for July fell 47 cents, or 0.5%, at $85.86 a barrel by 0005 GMT. US West Texas Intermediate crude for June declined 53 cents, or 0.6%, to $81.40 per barrel.
US crude oil inventories swelled last week by 4.906 million barrels, while gasoline and distillate stockpiles fell, Reuters reported citing American Petroleum Institute figures.
Gasoline inventories fell by 1.483 million barrels, and distillates fell by 2.187 million barrels. Official data from the EIA is due at 10:30 a.m. EDT (1430 GMT).
US crude supply is also showing signs of ramping up, with production rising to 13.15 million barrels per day (bpd) in February from 12.58 million bpd in January in its biggest monthly increase in about 3-1/2 years, the Energy Information Administration had said.
Expectations that a ceasefire agreement between Israel and Hamas could be in sight, following a renewed push led by Egypt to revive stalled negotiations between the two, pushed oil prices lower. An end to the war would reduce concerns of a broadening of the conflict that could disrupt supply from the Middle East.
Keeping oil from slipping further, output by the Organization of the Petroleum Exporting Countries (OPEC) was seen falling by 100,000 bpd in April to 26.49 million bpd, a Reuters survey found on Tuesday, reflecting lower exports from Iran, Iraq and Nigeria against a backdrop of ongoing voluntary supply cuts by some members agreed with the wider OPEC+ alliance.
With Reuters inputs
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