Oil Stocks Outlook for the week – 11 to 15.04.2016
(PSU
refiners seen robust next week; oil prices eyed)
( www.rupeedesk.in )
Shares
of the three state-owned refiners--Indian Oil Corp Ltd, Bharat Petroleum Corp
Ltd
and Hindustan Petroleum Corp Ltd are likely to continue with a strong showing
in
the
immediate term on hopes of robust Jan-Mar earnings, and expectations of
inventory
gains
and robust refining margins.
There
are not any major triggers in the coming week and the trend will be dictated by
news
flow, broader market, and of course, global crude oil prices. The coming week
is
truncated
as markets are closed Thursday and Friday on account of Ambedkar Jayanti
and
Ram Navami, respectively.
Prices
of crude oil have inched up over the past month or so but have been rangebound.
They
have largely stayed between $35 and $40 per barrel. Even as an uptick in prices
of crude oil is considered a negative for margins of oil-refining companies, in
the current environment, these entities too have benefited from the slight
improvement.
Shares
of the three state-owned fuel retailers have reacted positively on expectations
of
inventory
gains due to the recent recovery in crude prices. Though prices of crude oil are
largely seen stabilising after some upward movement in the near-to-medium term,
it is not clear if the current uptick in prices will continue in the week
starting Monday.
Oil
Minister Dharmendra Pradhan, along with key executives of public sector oil majors,
will be visiting Iran and the United Arab Emirates between Apr 9 and Apr 12.
Possible
deals pertaining to crude oil procurement and upstream opportunities may have
a
positive impact on the concerned stocks.
Fluctuation
in the dollar-rupee exchange rate is also likely to affect stocks of downstream
and upstream oil companies. If the dollar strengthens against the rupee, it will
hit refining companies, while benefiting upstream players. A weak dollar, on
the other hand, will help downstream companies, as India primarily relies on
imported crude oil to meet its requirements.
