Oil Stocks Outlook for the week – 19 to 23.06.2017
Oil Stocks Outlook for the week – 19 to 23.06.2017
Stocks of public sector oil refiners and retailers—Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp--could continue to fall next week, given the prevailing weakness in their charts, technical. These stocks have had breakdowns over the past two-three weeks and our view is largely negative on them. On charts, a bounce-back seems unlikely in the immediate term. But they still look good from a long-term perspective. Over the last one week, the IOC Indian Oil stock has declined 3.7%, while stocks of BPCL have fallen 4.3%. The HPCL stock was down 1.8%. As far as fundamentals are concerned, these companies continue to be on solid ground, benefiting from the rise in domestic demand for fuels, as well as robust refining and marketing margins. These factors lent these stocks a positive fundamental outlook for the medium-to-long term. In the absence of any major sectoral triggers, stocks of oil companies could be impacted by crude oil prices, news flow, and sentiment in the broad market. Crude oil contracts are expected to trade lower on domestic and global exchanges next week due to concern over higher supply from major producing nations. Hopes of reduction in global supply seem to have been quashed by the International Energy Agency's report of increasing supply next year from producers that aren't part of the Organization of the Petroleum Exporting Countries Stocks of upstream players such as Oil and Natural Gas Corp and Oil India may remain weak on account of the likely decline in crude oil prices. On technical charts, too, the two stocks seem to be on shaky ground in the immediate future. Any major shift in the dollar-rupee exchange rate could also impact shares of oil companies. If the dollar weakens against the rupee, it could add to the woes of upstream companies. This is because upstream companies price oil and gas in dollars and a weak greenback leads to a decline in the actual price realisation in rupee terms. On the other hand, refining companies stand to gain from a weaker dollar, as it would reduce their outgo towards purchase of crude oil and gas.
Source : Cogencis Information Services Ltd.
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Oil Stocks Outlook for the week – 19 to 23.06.2017
Stocks of public sector oil refiners and retailers—Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp--could continue to fall next week, given the prevailing weakness in their charts, technical. These stocks have had breakdowns over the past two-three weeks and our view is largely negative on them. On charts, a bounce-back seems unlikely in the immediate term. But they still look good from a long-term perspective. Over the last one week, the IOC Indian Oil stock has declined 3.7%, while stocks of BPCL have fallen 4.3%. The HPCL stock was down 1.8%. As far as fundamentals are concerned, these companies continue to be on solid ground, benefiting from the rise in domestic demand for fuels, as well as robust refining and marketing margins. These factors lent these stocks a positive fundamental outlook for the medium-to-long term. In the absence of any major sectoral triggers, stocks of oil companies could be impacted by crude oil prices, news flow, and sentiment in the broad market. Crude oil contracts are expected to trade lower on domestic and global exchanges next week due to concern over higher supply from major producing nations. Hopes of reduction in global supply seem to have been quashed by the International Energy Agency's report of increasing supply next year from producers that aren't part of the Organization of the Petroleum Exporting Countries Stocks of upstream players such as Oil and Natural Gas Corp and Oil India may remain weak on account of the likely decline in crude oil prices. On technical charts, too, the two stocks seem to be on shaky ground in the immediate future. Any major shift in the dollar-rupee exchange rate could also impact shares of oil companies. If the dollar weakens against the rupee, it could add to the woes of upstream companies. This is because upstream companies price oil and gas in dollars and a weak greenback leads to a decline in the actual price realisation in rupee terms. On the other hand, refining companies stand to gain from a weaker dollar, as it would reduce their outgo towards purchase of crude oil and gas.
Source : Cogencis Information Services Ltd.
