Oil Stocks Outlook For The Week – 30.10.2017 To 03.11.2017
Oil Stocks Outlook For The Week – 30.10.2017 To 03.11.2017
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Stocks of public sector oil refiners and retailers, Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp, are expected to consolidate next week. Of the three stocks, Indian Oil is
likely to be in focus early next week. The stock closed 4.9% lower today after the company's Jul-Sep earnings; missed estimates, despite a year-on-year rise in net profit. Any weakness in the stock may rub off on Bharat Petroleum and Hindustan Petroleum as well. Shares of state-owned upstream major Oil and Natural Gas Corp Ltd will also be in focus early next week as the company is scheduled to detail its earnings for the quarter ended September on Saturday. ONGC's net profit for Jul-Sep is seen falling 8.9% on year to 45.34 bln rupees, even as net sales are seen rising 9.3% on year to 199.91 bln rupees. In terms of fundamentals, the three state-owned fuel retailers continue to be on solid ground, benefiting from healthy domestic demand for fuels as well as robust core refining and marketing margins, which lend a positive outlook to these stocks. In the absence of any major sectoral triggers, stocks of oil companies are expected to be guided by the movement in crude oil prices, news flow and the broader market sentiment. Futures contracts of crude oil on global and domestic exchanges are likely to rise next week on hopes of an oil market that is rebalanced in terms of supply and
demand. Reflecting the sentiment, Brent crude oil on the Intercontinental Exchange is seen trading near the crucial psychological level of $60-a-bbl as it is convinced that the oil market is rapidly tightening. The pronounced decline in oil product stocks in the US that was reported this week appears to confirm this view. Action seen stock specific on Jul-Sep earnings Action seen stock-specific ahead of earnings Saudi Arabia's Crown Prince Mohammed bin Salman on Thursday backed the extension of the OPEC-led production cut deal beyond March, and this, too, may lift oil prices next week. Growing consensus on extending the global output cut deal is keeping hold rock steady near multi-month highs. Iraq oil export situation will also remain in focus as the second largest producer in Organization of the Petroleum Exporting Countries have resumed production in the disputed Kirkuk province. Back home, stocks of upstream players such as Oil and Natural Gas Corp and Oil India may move in line with the movement in crude oil prices next week. The fundamentals for these stocks have begun to improve as strong oil prices that 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 )
Stocks of public sector oil refiners and retailers, Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp, are expected to consolidate next week. Of the three stocks, Indian Oil is
likely to be in focus early next week. The stock closed 4.9% lower today after the company's Jul-Sep earnings; missed estimates, despite a year-on-year rise in net profit. Any weakness in the stock may rub off on Bharat Petroleum and Hindustan Petroleum as well. Shares of state-owned upstream major Oil and Natural Gas Corp Ltd will also be in focus early next week as the company is scheduled to detail its earnings for the quarter ended September on Saturday. ONGC's net profit for Jul-Sep is seen falling 8.9% on year to 45.34 bln rupees, even as net sales are seen rising 9.3% on year to 199.91 bln rupees. In terms of fundamentals, the three state-owned fuel retailers continue to be on solid ground, benefiting from healthy domestic demand for fuels as well as robust core refining and marketing margins, which lend a positive outlook to these stocks. In the absence of any major sectoral triggers, stocks of oil companies are expected to be guided by the movement in crude oil prices, news flow and the broader market sentiment. Futures contracts of crude oil on global and domestic exchanges are likely to rise next week on hopes of an oil market that is rebalanced in terms of supply and
demand. Reflecting the sentiment, Brent crude oil on the Intercontinental Exchange is seen trading near the crucial psychological level of $60-a-bbl as it is convinced that the oil market is rapidly tightening. The pronounced decline in oil product stocks in the US that was reported this week appears to confirm this view. Action seen stock specific on Jul-Sep earnings Action seen stock-specific ahead of earnings Saudi Arabia's Crown Prince Mohammed bin Salman on Thursday backed the extension of the OPEC-led production cut deal beyond March, and this, too, may lift oil prices next week. Growing consensus on extending the global output cut deal is keeping hold rock steady near multi-month highs. Iraq oil export situation will also remain in focus as the second largest producer in Organization of the Petroleum Exporting Countries have resumed production in the disputed Kirkuk province. Back home, stocks of upstream players such as Oil and Natural Gas Corp and Oil India may move in line with the movement in crude oil prices next week. The fundamentals for these stocks have begun to improve as strong oil prices that 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.
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Source : Cogencis Information Services Ltd.
