Oil Stocks Outlook for the week – 03 to 07.07.2017
Oil Stocks Outlook for the week – 03 to 07.07.2017
( www.rupeedesk.in )
Recovering from a round of short-term correction, shares of public sector oil refiners and retailers--
Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp--may consolidate next
week. The stocks had been falling for the past few weeks after a strong rally. The recovery began
this week and is likely to continue over the next few sessions.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 prices of crude oil, news flow, and sentiment in the broad market. Uncertainty over the disruptions emanating from the rollout of the goods and services tax is likely to keep domestic equities subdued next week. The transition to uniform tax rates across the country is unlikely to be smooth and will add to the volatility in local shares in the near term, which could have an impact on stocks of oil companies as well. Crude oil futures are likely to trade with a negative bias on local and global exchanges next week as persistent worries of oversupply may keep haunting markets. Crude oil prices surged to an over two-week high this week after the Energy Information Administration reported a 100,000 bbl fall in US output in the week ended Jun 16.
Oil production had been hit as tropical storm Cindy hit the Gulf of Mexico last week. The Gulf of
Mexico accounts for 17% of total US crude oil production. However, US oil inventories rose by
100,000 bbl in the reporting week, confounding expectations of a 2.4-mln-bbl decline. Oil
inventories remain high and supply overhang continues to drive the story in oil markets. The 1.8
mln bpd output cut deal by the Organization of the Petroleum Exporting Countries and non-OPEC
members may be insufficient to reduce the supply glut. Stocks of upstream players such as Oil and Natural Gas Corp and Oil India may remain weak on account of a likely decline in crude oil prices. On technical charts, too, the two stocks are on shaky ground in the immediate Future. Any major shift in the dollar-rupee exchange rates 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 – 03 to 07.07.2017
( www.rupeedesk.in )
Recovering from a round of short-term correction, shares of public sector oil refiners and retailers--
Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp--may consolidate next
week. The stocks had been falling for the past few weeks after a strong rally. The recovery began
this week and is likely to continue over the next few sessions.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 prices of crude oil, news flow, and sentiment in the broad market. Uncertainty over the disruptions emanating from the rollout of the goods and services tax is likely to keep domestic equities subdued next week. The transition to uniform tax rates across the country is unlikely to be smooth and will add to the volatility in local shares in the near term, which could have an impact on stocks of oil companies as well. Crude oil futures are likely to trade with a negative bias on local and global exchanges next week as persistent worries of oversupply may keep haunting markets. Crude oil prices surged to an over two-week high this week after the Energy Information Administration reported a 100,000 bbl fall in US output in the week ended Jun 16.
Oil production had been hit as tropical storm Cindy hit the Gulf of Mexico last week. The Gulf of
Mexico accounts for 17% of total US crude oil production. However, US oil inventories rose by
100,000 bbl in the reporting week, confounding expectations of a 2.4-mln-bbl decline. Oil
inventories remain high and supply overhang continues to drive the story in oil markets. The 1.8
mln bpd output cut deal by the Organization of the Petroleum Exporting Countries and non-OPEC
members may be insufficient to reduce the supply glut. Stocks of upstream players such as Oil and Natural Gas Corp and Oil India may remain weak on account of a likely decline in crude oil prices. On technical charts, too, the two stocks are on shaky ground in the immediate Future. Any major shift in the dollar-rupee exchange rates 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.
