Oil Stocks Outlook for the week – 26 to 30.10.2015
Crude
prices key, PSU refiners seen in range
( www.rupeedesk.in )
Stocks
of upstream oil companies will track the movement in crude oil prices next week
while
those of state-owned oil marketing companies are seen in a narrow range due to
lack
of imminent triggers.
Crude
oil prices raised yesterday after the People's Bank of China announced 25 basis
points
cut in its benchmark lending rate, the sixth since November. However, they soon
gave
up gains and WTI was down nearly 2% at $44.54 per barrel on fear of high
inventories.
The price of Indian basket of crude oil slipped below $45 a barrel this week
from
around $47.30 last Friday, which weighed on the stocks of the oil producers.
However,
hopes of improvement in demand from China, one of the largest importers of
crude
oil and a likely announcement of new stimulus measures by the European Central
Bank
may lift oil prices next week.
Oil
and Natural Gas Corp Ltd and Oil India Ltd stocks may gain if crude oil prices
move
up.
Cairn India, which witnessed volatility and high volumes this week after
reporting
poor
Jul-Sep earnings, may also gain but the upside is likely to be capped due to a
proposal
to merge the company with Vedanta Ltd. Cairn India's Jul-Sep consolidated net
profit
for Jul-Sep slumped 70.5% on year to 6.73 bln rupees due to the sharp fall in
oil
prices
since last year.
Stocks
of the state-owned refining companies--Indian Oil Corp Ltd, Bharat Petroleum
Corp
Ltd, and Hindustan Petroleum Corp Ltd--are likely to remain in a range as none
of
them
are detailing earnings till the second week of November. While these companies
are
expected
to report weak Jul-Sep earnings due to inventory losses and lower refining
margins,
the outlook has improved in view of uptick in demand for gasoline and
seasonally
strong demand for furnace oil. Movement in crude oil prices will also be a key
for
the shares of these companies as further decline may pile up inventory losses
in Oct-
Dec
as well, chipping off gains in gross refining margin.