Oil Stocks Outlook For The Week - 03 to 06.10.2017
Oil Stocks Outlook For The Week - 03 to 06.10.2017
( www.rupeedesk.in )
The stocks of public sector oil refiners and retailers--Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp--are likely to move up marginally this week. The three state-owned fuel retailers continue to be on solid ground, benefiting from the healthy domestic demand for fuels as well as robust core refining and marketing margins, which lend a positive outlook for these stocks in the medium-to-long term. Refining margins have been strong at $8.3/bbl since July 2017 due to high unplanned shutdown, globally; we expect this to continue for a while. After a bit of a slowdown in FY17, consumption of both petrol and diesel has grown strongly at 8.3% and 4.5%, respectively in FY18YTD (year to date). In the absence of any other major sectoral triggers, stocks of oil companies could be impacted by prices of crude oil, news flow and sentiment in the broader market. With a rise in global demand, particularly in China, and increasing investor faith in implementation of production cuts by major crude oil producers globally in a bid to ease the supply glut, oil prices are seen inching up for the immediate to near term. Crude oil prices reported a strong recovery over the past two to three weeks in anticipation of a rise in demand as US refiners resumed operations after hurricanes Harvey and Irma. This week, crude oil prices traded at their highest levels in over two years, and were closing in on the $60-per-bbl mark. The International Energy Agency has also increased its demand outlook for crude oil for the remainder of 2017. Recent geopolitical events, particularly Turkey's threat to shut down a pipeline that carries 700,000 bbl a day of oil from Kurdistan into the international market after the Kurdish people voted for independence in a recent referendum, have also pushed prices on an upward trajectory. Stocks of upstream players such as Oil and Natural Gas Corp and Oil India may react in line with the movement in crude oil prices this week. The fundamentals for these stocks have begun to improve as strong oil prices will lead to strong financial performance for upstream companies. Any major shift in the dollar-rupee exchange rate could also impact stocks 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 dollar terms and a weak greenback pulls down 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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( www.rupeedesk.in )
The stocks of public sector oil refiners and retailers--Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp--are likely to move up marginally this week. The three state-owned fuel retailers continue to be on solid ground, benefiting from the healthy domestic demand for fuels as well as robust core refining and marketing margins, which lend a positive outlook for these stocks in the medium-to-long term. Refining margins have been strong at $8.3/bbl since July 2017 due to high unplanned shutdown, globally; we expect this to continue for a while. After a bit of a slowdown in FY17, consumption of both petrol and diesel has grown strongly at 8.3% and 4.5%, respectively in FY18YTD (year to date). In the absence of any other major sectoral triggers, stocks of oil companies could be impacted by prices of crude oil, news flow and sentiment in the broader market. With a rise in global demand, particularly in China, and increasing investor faith in implementation of production cuts by major crude oil producers globally in a bid to ease the supply glut, oil prices are seen inching up for the immediate to near term. Crude oil prices reported a strong recovery over the past two to three weeks in anticipation of a rise in demand as US refiners resumed operations after hurricanes Harvey and Irma. This week, crude oil prices traded at their highest levels in over two years, and were closing in on the $60-per-bbl mark. The International Energy Agency has also increased its demand outlook for crude oil for the remainder of 2017. Recent geopolitical events, particularly Turkey's threat to shut down a pipeline that carries 700,000 bbl a day of oil from Kurdistan into the international market after the Kurdish people voted for independence in a recent referendum, have also pushed prices on an upward trajectory. Stocks of upstream players such as Oil and Natural Gas Corp and Oil India may react in line with the movement in crude oil prices this week. The fundamentals for these stocks have begun to improve as strong oil prices will lead to strong financial performance for upstream companies. Any major shift in the dollar-rupee exchange rate could also impact stocks 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 dollar terms and a weak greenback pulls down 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.
Ongc - Down
Gail - Up
Hindpetro - Up
Bpcl - Up
Oil - Up
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Source : Cogencis Information Services Ltd.
