Oil Stocks Outlook for the week – 09 to 13.01.2017
Oil Stocks Outlook for the week – 09 to 13.01.2017
( www.rupeedesk.in )
Stocks of public sector oil marketing companies--Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd, and Hindustan
Petroleum Corp Ltd—are expected to continue ticking higher next week, outperforming the broader Market. These
stocks are backed by strong fundamentals, including robust domestic demand for fuel and strong refining and
marketing margins and expectations of inventory gains due to a spike in crude oil and petroleum product prices.
For upstream companies like Oil and Natural Gas Corp Ltd, Cairn India Ltd, and Oil India Ltd, the rise in prices of
crude oil over the past few weeks has lent some strength for the immediate-to-near term. In the absence of any major
triggers, movement in stocks of oil companies is likely to depend on crude oil prices, news flow, and the broader
market.
The recent spurt in prices followed the Organization of the Petroleum Exporting Countries' decision to cut output by
1.2 mln barrels per day. It was further helped by major non-OPEC producers joining the production management
arrangement by agreeing to cut their output by 558,000 bpd.
Though the rise in prices of crude oil will increase input costs for refiners, they are set to benefit from inventory
gains due to the spike. Also, given that prices of most fuels are now market-linked, the downside of higher crude oil
prices for these companies seems limited for the time being.
State-owned oil marketing companies' Oct-Dec gross refining margins are expected in the healthy $6.8-$7.4 per
barrel range, driven by strong product cracks and inventory gains. According to tracking crude oil, futures contracts
of the commodity on both local and global exchanges are seen declining in the initial sessions next week as the
ongoing rally could lose steam. Prices of crude oil rose to an 18-month high of $55.24 a bbl on Tuesday after reports said the Organization of the
Petroleum Exporting Countries would adhere to output cut proposals, which come into effect this month. Crude will
take a breather and some profit booking can be seen next Week.
However, record high production from Russia, and rising output from Libya and Nigeria has raised doubts over the
deal. However, the expected weakening of the dollar could lend some support to crude oil prices.
Free Intraday Tips : Join Our Whatsapp No : 9841986753
Free Commodity Tips : Join our Whatsapp No : 9094047040
Oil Stocks Outlook for the week – 09 to 13.01.2017
( www.rupeedesk.in )
