Oil Stocks Outlook for the week - 28.08.2017 to 01.09.2017

Oil Stocks Outlook for the week - 28.08.2017 to 01.09.2017

Free Intraday Tips : Join Our Whatsapp No : 9841986753
Free Commodity Tips : Join our Whatsapp No : 9094047040

Oil Stocks Outlook for the week - 28.08.2017 to 01.09.2017 )

The shares of public sector oil refiners and retailers—Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp--are seen rising next week, albeit in a narrow range. These stocks had recovered from a spell of correction around a week ago and have been strengthening since then. As far as fundamentals are concerned, 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 core refining and marketing margins, which lend a positive outlook for these stocks in the medium-to-long term. In the absence of major sectoral triggers, shares of oil companies are likely to be influenced by prices of crude oil, news flow, and sentiment in the broader market. Futures contracts of crude oil on global and domestic exchanges are expected to trade in narrow range next week. Higher production of crude in the US is likely to offset the gains from eighth consecutive weeks of decline in the crude inventory. However, prices are likely to get support from disruptions caused due to tropical storms advancing towards the oil-producing facilities in the Gulf of Mexico. "US oil production could be dampened in the short term, however, as production in the Gulf of Mexico will be temporarily scaled back because of a hurricane. According to preliminary surveys, output of the Organization of the Petroleum Exporting Countries is seen falling in August compared with the previous month. However, the compliance by the oil cartel along with other producers to the output cut deal is seen falling to 94% in August
compared with 98% in July. The stocks of upstream players such as Oil and Natural Gas Corp and Oil India may react in line with the movement in crude oil prices next week. Any major shift in the dollar rupee exchange rate could also impact shares 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 pulls down 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.