Oil Stocks Outlook for the week – 24 to 28.07.2017
Oil Stocks Outlook for the week – 24 to 28.07.2017
( www.rupeedesk.in )
Stocks of public sector oil refiners and retailers—Indian Oil Corp, Bharat Petroleum Corp, and
Hindustan Petroleum Corp--are expected to rise next week after a phase of consolidation.
The three state-owned fuel retailers continue to be on solid ground, benefiting from the rise in
domestic demand for fuels as well as robust refining and marketing margins, which lend a positive
outlook for these stocks in the medium-to-long term. Of the three stocks, focus shall be on Hindustan Petroleum in view of the Cabinet approval for Oil and Natural Gas Corp buying the government's 51.1% stake in the company. The Hindustan Petroleum stock witnessed a steep rise over the past couple of weeks in the run up to the Cabinet decision. However, with the government ruling out an open offer by ONGC and the need for an approval by minority shareholders of either company, the stock faced significant correction. Any further clarity on the proposed transaction would, in all likelihood, have a bearing on the stocks of Hindustan Petroleum and ONGC. In the absence of any other major sectoral triggers, shares of oil companies could be impacted by prices of crude oil, news flow and sentiment in the broader market. Futures contracts of crude oil on global and domestic exchanges are seen rising next week due to expectations of falling inventories. In the week ended Jul 14, crude oil inventories in the US fell by 4.7 mln bbl, while the market had estimated a fall of 3.1 mln bbl, according to data from the US Energy Information Administration. Petrol stocks declined by 4.4 mln bbl, against an estimated fall of 600,000 bbl. Reports that crude oil inventories in Saudi Arabia are declining considerably are another positive for prices. OPEC and other producers are scheduled to meet in St Petersburg, Russia, on Monday. They are likely to discuss whether countries such as Nigeria and Libya could be subjected to production cuts, as their output had recovered significantly. Currently, the two countries are exempt from output cuts. Stocks of upstream players such as ONGC and Oil India may remain weak on account of low crude oil prices. On technical charts, the two stocks are expected to consolidate. Any major shift in the dollarrupee exchange rates could also impact stock of oil companies. If the dollar weakens against the rupee, it could add to the woes of upstream companies. This is because upstream companies price oil and gas in dollar terms and a weak greenback leads to a decline in the actual price realisation in rupee terms. On the other hand, refining companies stand to gain from a weaker dollar, as it would reduce their outgo towards purchase of crude oil and gas.
Source : Cogencis Information Services Ltd.
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Oil Stocks Outlook for the week – 24 to 28.07.2017
( www.rupeedesk.in )
Stocks of public sector oil refiners and retailers—Indian Oil Corp, Bharat Petroleum Corp, and
Hindustan Petroleum Corp--are expected to rise next week after a phase of consolidation.
The three state-owned fuel retailers continue to be on solid ground, benefiting from the rise in
domestic demand for fuels as well as robust refining and marketing margins, which lend a positive
outlook for these stocks in the medium-to-long term. Of the three stocks, focus shall be on Hindustan Petroleum in view of the Cabinet approval for Oil and Natural Gas Corp buying the government's 51.1% stake in the company. The Hindustan Petroleum stock witnessed a steep rise over the past couple of weeks in the run up to the Cabinet decision. However, with the government ruling out an open offer by ONGC and the need for an approval by minority shareholders of either company, the stock faced significant correction. Any further clarity on the proposed transaction would, in all likelihood, have a bearing on the stocks of Hindustan Petroleum and ONGC. In the absence of any other major sectoral triggers, shares of oil companies could be impacted by prices of crude oil, news flow and sentiment in the broader market. Futures contracts of crude oil on global and domestic exchanges are seen rising next week due to expectations of falling inventories. In the week ended Jul 14, crude oil inventories in the US fell by 4.7 mln bbl, while the market had estimated a fall of 3.1 mln bbl, according to data from the US Energy Information Administration. Petrol stocks declined by 4.4 mln bbl, against an estimated fall of 600,000 bbl. Reports that crude oil inventories in Saudi Arabia are declining considerably are another positive for prices. OPEC and other producers are scheduled to meet in St Petersburg, Russia, on Monday. They are likely to discuss whether countries such as Nigeria and Libya could be subjected to production cuts, as their output had recovered significantly. Currently, the two countries are exempt from output cuts. Stocks of upstream players such as ONGC and Oil India may remain weak on account of low crude oil prices. On technical charts, the two stocks are expected to consolidate. Any major shift in the dollarrupee exchange rates could also impact stock of oil companies. If the dollar weakens against the rupee, it could add to the woes of upstream companies. This is because upstream companies price oil and gas in dollar terms and a weak greenback leads to a decline in the actual price realisation in rupee terms. On the other hand, refining companies stand to gain from a weaker dollar, as it would reduce their outgo towards purchase of crude oil and gas.
Source : Cogencis Information Services Ltd.
