Oil Stocks Outlook for the week – 20 to 24.02.2017
Oil Stocks Outlook for the week – 20 to 24.02.2017
( www.rupeedesk.in )
Stocks of public-sector oil refining and marketing companies--Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp--are likely to trade in a range with a positive bias. These scrips are backed by strong fundamentals, which include increasing domestic demand for fuel and strong refining and marketing margins. Prices of crude oil have appreciated in the past two-an-ahalf months, and this has helped stocks of upstream companies such as Oil and Natural Gas Corp Ltd, Cairn India Ltd, and Oil India Ltd. The outlook for upstream stocks continues to remain positive in the immediate-to-near term. In the absence of any major triggers, movement in stocks of oil companies is likely to be influenced by movement in price of crude oil, news flow, and sentiment in the broader market. Trading will take place for four sessions next week as stock markets are closed on Friday on account of Mahashivratri. The rise in prices of crude oil followed the decision of the Organization of the Petroleum Exporting Countries to cut output by 1.8 mln barrels per day in the first six months of 2017. It was further aided by major non-OPEC producers agreeing to cut output by 558,000 bpd to help trim global glut. Though the rise in crude oil prices will increase input costs for refiners, they are set to benefit from inventory gains due to the spike, as was evident from the Oct-Dec earnings of refining companies. Also, given that prices of most fuels are now marketlinked, the downside of higher prices for these companies seems limited for the time being. According to analysts tracking crude oil, futures contracts of crude oil are likely to trade in a narrow range, with a positive bias, in the next five-six sessions, as investors weigh reports of major producers extending output cuts into the second half of the calendar year amid rising supply in the US. According to the International Energy Agency, OPEC members have reached a 90% compliance with their agreed output cut. The technical analyst said the Indian Oil scrip is the top pick among those of the three state-owned oil marketing companies. Stocks of ONGC are seen trading in a range with a positive bias. The Oil India scrip is also likely to remain range-bound but there is no clear direction on charts as to which way it may move. Any major fluctuation in the dollar-rupee exchange rates could also affect shares of oil companies. A weaker rupee will benefit upstream companies, as they sell oil and gas in dollars. But refiners tend to lose if the dollar strengthens, as their outgo on buying oil and gas will increase.
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Oil Stocks Outlook for the week – 20 to 24.02.2017
( www.rupeedesk.in )
Stocks of public-sector oil refining and marketing companies--Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp--are likely to trade in a range with a positive bias. These scrips are backed by strong fundamentals, which include increasing domestic demand for fuel and strong refining and marketing margins. Prices of crude oil have appreciated in the past two-an-ahalf months, and this has helped stocks of upstream companies such as Oil and Natural Gas Corp Ltd, Cairn India Ltd, and Oil India Ltd. The outlook for upstream stocks continues to remain positive in the immediate-to-near term. In the absence of any major triggers, movement in stocks of oil companies is likely to be influenced by movement in price of crude oil, news flow, and sentiment in the broader market. Trading will take place for four sessions next week as stock markets are closed on Friday on account of Mahashivratri. The rise in prices of crude oil followed the decision of the Organization of the Petroleum Exporting Countries to cut output by 1.8 mln barrels per day in the first six months of 2017. It was further aided by major non-OPEC producers agreeing to cut output by 558,000 bpd to help trim global glut. Though the rise in crude oil prices will increase input costs for refiners, they are set to benefit from inventory gains due to the spike, as was evident from the Oct-Dec earnings of refining companies. Also, given that prices of most fuels are now marketlinked, the downside of higher prices for these companies seems limited for the time being. According to analysts tracking crude oil, futures contracts of crude oil are likely to trade in a narrow range, with a positive bias, in the next five-six sessions, as investors weigh reports of major producers extending output cuts into the second half of the calendar year amid rising supply in the US. According to the International Energy Agency, OPEC members have reached a 90% compliance with their agreed output cut. The technical analyst said the Indian Oil scrip is the top pick among those of the three state-owned oil marketing companies. Stocks of ONGC are seen trading in a range with a positive bias. The Oil India scrip is also likely to remain range-bound but there is no clear direction on charts as to which way it may move. Any major fluctuation in the dollar-rupee exchange rates could also affect shares of oil companies. A weaker rupee will benefit upstream companies, as they sell oil and gas in dollars. But refiners tend to lose if the dollar strengthens, as their outgo on buying oil and gas will increase.