Oil Stocks Outlook for the week – 15 to 19.12.2014
( www.rupeedesk.in )
The movement of stocks of major oil and gas companies will
continue to be determined by prices of crude oil that are likely to remain bearish in
the coming week as concerns of oversupply continue to spook markets.
The state-owned upstream companies--Oil and Natural Gas
Corp Ltd, Oil India ltd and Cairn India Ltd--are likely to continue to be under pressure in
the next five trading sessions.
Over the last week, price of Indian crude oil basket has
fallen from around $67 per barrel to around $62--the lowest in five years--dragging the stocks
of upstream companies which have to sell crude at lower prices. Falling crude prices prima
facie have a positive impact on the public sector oil retailers--Indian Oil Corp Ltd, Bharat
Petroleum Corp Ltd, and Hindustan Petroleum Corp Ltd.
We believe low crude oil prices to benefit the entire oil
and gas sector including the gas utilities as LNG prices are linked to crude prices and spot LNG
prices have also trended lower with fall in crude prices. The oil marketing companies' scrips,
however, will largely be guided by the dollarrupee exchange rate.
The rupee has declined against the dollar over the last
week and hit a near 10-month low today. It ended at 62.29 per dollar Friday. Also, the
three oil-marketing companies' gains on decline in crude oil prices are limited by the piling up
inventory losses.
The oil companies are also likely to face pressure of the
broad market as the benchmark stock indices are expected to decline further next week after
the industrial production data for October
released today post market hours. India October IIP contracted 4.2% on year.
