Oil Stocks Outlook for the week – 24 to 28.04.2017
Oil Stocks Outlook for the week – 24 to 28.04.2017
( www.rupeedesk.in )
The shares of public sector oil refining and retailing companies--Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd, and Hindustan Petroleum Corp Ltd--are likely to move higher next week on the back of strong technical charts and robust fundamentals. These three companies are backed by strong fundamentals, including rising domestic demand for fuels and robust refining and marketing margins, which lends them a positive outlook for the medium to long term. In the absence of any major sectoral triggers, crude oil prices, news flow and the broad market sentiment could impact the shares of oil companies. Prices of crude oil are likely to remain under pressure next week because of rising production in the US and amid uncertainty about major producers extending output cut beyond June. Saudi Arabia's Energy Minister Khalid al-Falih had said production cut deal could be extended for another three or six months beyond June. The prospect of the extension of the output deal was reiterated by Kuwait. According to media reports, Kuwait's Oil Minister Essam al-Marzouq has said the country expects Organization of the Petroleum Exporting Countries and other major producers to extend the agreement. However, the market has not reacted to these statements given that such news is released on a daily basis, and OPEC's goal to erode crude inventories to five-year average is far from being achieved. Scepticism is therefore warranted, especially as it is still unclear whether the new deal will apply for six or only three months, and whether non-OPEC countries will sign up to it. OPEC and other producers had agreed to cut output by 1.8 mln barrels per day in Jan-Jun. Stocks of upstream players such as Oil and Natural Gas Corp Ltd and Oil India Ltd may witness negativity on account of the weakness in oil prices. If the dollar weakens against the rupee, it could add to the woes of upstream companies' stocks. This is because these companies price oil and gas in dollars and a weaker greenback means lower 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 – 24 to 28.04.2017
( www.rupeedesk.in )
The shares of public sector oil refining and retailing companies--Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd, and Hindustan Petroleum Corp Ltd--are likely to move higher next week on the back of strong technical charts and robust fundamentals. These three companies are backed by strong fundamentals, including rising domestic demand for fuels and robust refining and marketing margins, which lends them a positive outlook for the medium to long term. In the absence of any major sectoral triggers, crude oil prices, news flow and the broad market sentiment could impact the shares of oil companies. Prices of crude oil are likely to remain under pressure next week because of rising production in the US and amid uncertainty about major producers extending output cut beyond June. Saudi Arabia's Energy Minister Khalid al-Falih had said production cut deal could be extended for another three or six months beyond June. The prospect of the extension of the output deal was reiterated by Kuwait. According to media reports, Kuwait's Oil Minister Essam al-Marzouq has said the country expects Organization of the Petroleum Exporting Countries and other major producers to extend the agreement. However, the market has not reacted to these statements given that such news is released on a daily basis, and OPEC's goal to erode crude inventories to five-year average is far from being achieved. Scepticism is therefore warranted, especially as it is still unclear whether the new deal will apply for six or only three months, and whether non-OPEC countries will sign up to it. OPEC and other producers had agreed to cut output by 1.8 mln barrels per day in Jan-Jun. Stocks of upstream players such as Oil and Natural Gas Corp Ltd and Oil India Ltd may witness negativity on account of the weakness in oil prices. If the dollar weakens against the rupee, it could add to the woes of upstream companies' stocks. This is because these companies price oil and gas in dollars and a weaker greenback means lower 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.