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Stocks of state-owned oil marketing companies are likely to be rangebound next week and will mostly track the dollar/rupee movement while stocks of upstream major Oil and Natural Gas Corp may remain under pressure due to shutdown of its operations in South Sudan. The Indian currency may come under pressure early in the week due to the usual month-end dollar demand from importers but broadly it is expected to trade around 62 rupees per dollar level through the week. On the other hand, international crude oil prices are expected to soften in 2014 as the demand scenario looks weak in the major economies. The US Energy Information Administration expects Brent crude oil price to decline gradually to $104 per barrel in 2014 from around $112 now.
In the shorter term, crude oil prices may remain stable. The state-owned oil marketing companies are still losing significantly on subsidised fuels, with the revenue loss on diesel at an astounding 10.5 rupees a litre despite sustained price hikes during the year. With the general elections around the corner, the market suspects whether the monthly price hike of 50 paise a litre in diesel will continue. The next hike is due on Dec 31, and an announcement in this regard will be keenly awaited. If oil companies continue to hike diesel price, it will give some positive momentum to stocks of Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp.
A hike will also help stocks of ONGC and Oil India. ONGC's overseas arm ONGC Videsh was forced to suspend operations in its oilfields in South Sudan last week as the local unrest intensified. ONGC Videsh operates two producing assets in South Sudan through its joint operating companies, Greater Pioneer Operating Co and SUDD Petroleum Operating Co, with participating interest of 25% and 24.125%, respectively. Greater Pioneer Operating Co was producing around 37,000 bbl per day in which ONGC Videsh's share is 9,250 bpd from Block 1,2,4. SUDD Petroleum Operating Co produces around 4,600 bpd where ONGC Videsh's share is 1,100 bpd from Block 5A. A prolonged shutdown will mean loss of revenue and the stock may come under pressure.
Stocks of state-owned oil marketing companies are likely to be rangebound next week and will mostly track the dollar/rupee movement while stocks of upstream major Oil and Natural Gas Corp may remain under pressure due to shutdown of its operations in South Sudan. The Indian currency may come under pressure early in the week due to the usual month-end dollar demand from importers but broadly it is expected to trade around 62 rupees per dollar level through the week. On the other hand, international crude oil prices are expected to soften in 2014 as the demand scenario looks weak in the major economies. The US Energy Information Administration expects Brent crude oil price to decline gradually to $104 per barrel in 2014 from around $112 now.
In the shorter term, crude oil prices may remain stable. The state-owned oil marketing companies are still losing significantly on subsidised fuels, with the revenue loss on diesel at an astounding 10.5 rupees a litre despite sustained price hikes during the year. With the general elections around the corner, the market suspects whether the monthly price hike of 50 paise a litre in diesel will continue. The next hike is due on Dec 31, and an announcement in this regard will be keenly awaited. If oil companies continue to hike diesel price, it will give some positive momentum to stocks of Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp.
A hike will also help stocks of ONGC and Oil India. ONGC's overseas arm ONGC Videsh was forced to suspend operations in its oilfields in South Sudan last week as the local unrest intensified. ONGC Videsh operates two producing assets in South Sudan through its joint operating companies, Greater Pioneer Operating Co and SUDD Petroleum Operating Co, with participating interest of 25% and 24.125%, respectively. Greater Pioneer Operating Co was producing around 37,000 bbl per day in which ONGC Videsh's share is 9,250 bpd from Block 1,2,4. SUDD Petroleum Operating Co produces around 4,600 bpd where ONGC Videsh's share is 1,100 bpd from Block 5A. A prolonged shutdown will mean loss of revenue and the stock may come under pressure.
