Oil Stocks Outlook: Marketing cos dn next wk on high crude prices

[B. Karthick]

Oil Stocks Outlook: Marketing cos dn next wk on high crude prices

Firm crude oil prices and weakness in broader indices are likely to
further pull down shares of state-run oil marketing companies next
week.
Crude prices are likely to remain firm in the near future and could
even
move closer to the $150 a barrel mark in the coming months.
Benefits of price hike in petrol, diesel and cooking gas announced
by
the government earlier this month have been eroded due to the rise in
crude
prices. The compensation package was based on the assumption that
crude
prices could fall from the current levels.
The package was based on the average Indian crude oil basket price
of
$113 per barrel.
The Organisation of Petroleum Exporting Countries, in its June
report
released yesterday, said the surge in global crude oil prices was
driven purely by speculative pressure and geopolitical concerns and is
not an indication of the supply-demand realities.
OPEC expects crude oil prices to ease from the current levels as
against
market projections that the fossil fuel could rise to $150-$200 a
barrel in
the coming months.
"The slowing U.S. economy and the current price environment will
affect
oil demand not only in the U.S. but also across the Organisation for
Economic
Co-operation and Development in the second half of this year," the
OPEC
report said.
We feel shares of oil marketing companies will continue to remain
under pressure until unless crude oil prices fall below $110 a barrel.
We also expect inflationary concerns to dent sentiment of broader
indices, which are likely to remain choppy next week.
India's headline inflation rate rose to an over seven-year-high of
8.75%
for the week ended May 31 from 8.24% a week earlier. We expect the
headline inflation to rise to double digits in the week to Jun 7 after
factoring in the fuel price hike decision taken on Jun 4.

Below are Friday's closing share prices, in rupees, of leading oil
companies on the National Stock Exchange, compared with a week
earlier:

Company Closing price Closing price %
Change
Jun 13 Jun 6
Oil and Natural Gas Corp 841.95 938.95
(-)10.3
Indian Oil Corp 374.15 378.05 (-)
1.0
Bharat Petroleum Corp 266.90 300.95
(-)11.3
Hindustan Petroleum Corp 187.00 212.75
(-)12.1
Reliance Industries 2,270.40 2,238.50
1.4
Cairn India 285.10 286.85 (-)
0.6
.
Nifty 4517.10 4627.80 (-)
2.4
Sensex 15189.62 15572.18 (-)
2.4
.
End

B.Karthick,
Research Analyst.