Oil Stocks Outlook for the week – 21 to 25.03.2016
PSU oil companies seen positive on
crude price recovery
( www.rupeedesk.in )
Stocks
of public sector oil companies, both downstream and upstream, are likely to
trade in a range
with
a positive bias next week, following an uptick in global crude oil prices.
Those apart, no major
triggers
for oil sector stocks are seen in the immediate term. Other factors likely to
lend direction to
the
movement of these stocks news flow and the broader market sentiment.
Crude
oil prices have staged a recovery through the past four weeks, helping
exploration and
production
companies. Recently, the International Energy Agency had said there are signs
that oil
prices
may have finally bottomed out and are now stabilising. They may even begin to
rise again, it
had
added. Such forecasts are likely to further strengthen prices.
Crude
oil futures on the Multi Commodity Exchange of India and the New York
Mercantile Exchange yesterday rose to the highest levels this year on hopes of
a freeze in output by major producers, which could bring stability to the oil
markets.
Crude
oil futures on NYMEX surged to $41.93 a bbl earlier last day after confirmation
of a meeting of around 15 major oil-producing nations in Doha on Apr 17. Though
Iran has said it will not join any accord to limit its output, market
participants have ignored the setback and are hopeful that a deal could help
reduce the glut and stabilise prices.
The
Indian crude oil basket rose to $38.05 a barrel by the end of the week, up from
$37.01 a barrel at
the
end of the previous week. If oil prices continue to improve, companies such as
ONGC, Oil India
Ltd
and Cairn India Ltd are set to gain.
Even
as an uptick in crude oil prices is seen putting pressure on the margins of oil
refining companies, in the current environment, these entities, too, are likely
to benefit from the rise. Shares of state-owned retailers Indian Oil Corp Ltd,
Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd may react positively
on expectations of inventory gains due to the recent crude price recovery.
