Oil Stocks Outlook: PSU retailers dn next wk on oil bounce back
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B. Karthick
Aug 23, 2008, 4:09:30 AM8/23/08
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Oil Stocks Outlook: PSU retailers dn next wk on oil bounce back
Saturday, Aug 23
Shares of state-run oil marketing companies are likely to weaken
further next week if crude oil prices continue to rebound after having
eased to around $112-levels until last week.
Any rise in crude oil prices has an immediate negative impact on
the state-run oil retailers' shares.
Crude oil contract for October delivery on the New York Mercantile
Exchange closed at $121 a barrel Thursday.
The price, which has been declining steadily in the past several
weeks, was reversed in the last few days due to escalating tension
between the U.S. and Russia.
There are concerns that Russia may disrupt oil supplies after the
U.S. and Poland signed a missile-shield agreement.
Shares of Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd and
Hindustan Petroleum Corp Ltd took a beating yesterday following the
recovery of crude oil prices Thursday.
However, in electronic trade yesterday, the contract lost $1.74 a
barrel and was trading at $119.44.
If crude oil prices start surging again, oil retailers' losses due
to sale of petroleum products at subsidised prices will increase
further putting pressure on their operations.
The three state-owned oil marketing firms are likely to incur a
gross
revenue loss of 66.7 bln rupees on subsidised sale of oil products in
the fortnight started Aug 16, sharply down from the preceding
fortnight due to easing crude oil prices.
Aggregate loss the three companies posted during Aug 1-15 was 90.3
bln rupees as against 113.35 bln rupees in the month-ago period,
estimates by these firms show.
The petroleum ministry had said the government would strive to
mitigate the revenue losses of these companies, but ruled out raising
fuel prices on a regular basis as a bailout measure.
However, we expect ONGC shares to hog the limelight next week on
reports that its overseas investment arm could be on a favourable
ground in its bid to acquire London Stock Exchange-listed Imperial
Energy with oil and gas fields in the Commonwealth of Independent
States, especially Russia.
A senior oil ministry official said that ONGC Videsh's $2.5 bln
bid for Imperial is competitive and a decision on the sale is expected
next week.
The official said that OVL may rope in a Russian partner, most
likely
state-run Rosneft, if it emerges a winner to ensure quicker approvals
from Moscow.
Following are this week's closing share prices, in rupees, of
leading oil companies on National Stock Exchange, compared with the
previous week:
Company Closing price Closing price %
Change
Aug 22 Aug 14
Oil and Natural Gas Corp 1,019.20 1,066.30
-4.4
Indian Oil Corp 395.65 441.05
-10.3
Bharat Petroleum Corp 292.95 318.00
-7.9
Hindustan Petroleum Corp 199.70 223.15
-2.8
Reliance Industries 2,244.80 2,276.70
-10.5
Cairn India 247.15 245.75
0.6
Nifty 4327.45 4430.70
-2.3
Sensex 14401.49 14724.18
-2.2
B.Karthick
Research Analyst.
Saturday, Aug 23
Shares of state-run oil marketing companies are likely to weaken
further next week if crude oil prices continue to rebound after having
eased to around $112-levels until last week.
Any rise in crude oil prices has an immediate negative impact on
the state-run oil retailers' shares.
Crude oil contract for October delivery on the New York Mercantile
Exchange closed at $121 a barrel Thursday.
The price, which has been declining steadily in the past several
weeks, was reversed in the last few days due to escalating tension
between the U.S. and Russia.
There are concerns that Russia may disrupt oil supplies after the
U.S. and Poland signed a missile-shield agreement.
Shares of Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd and
Hindustan Petroleum Corp Ltd took a beating yesterday following the
recovery of crude oil prices Thursday.
However, in electronic trade yesterday, the contract lost $1.74 a
barrel and was trading at $119.44.
If crude oil prices start surging again, oil retailers' losses due
to sale of petroleum products at subsidised prices will increase
further putting pressure on their operations.
The three state-owned oil marketing firms are likely to incur a
gross
revenue loss of 66.7 bln rupees on subsidised sale of oil products in
the fortnight started Aug 16, sharply down from the preceding
fortnight due to easing crude oil prices.
Aggregate loss the three companies posted during Aug 1-15 was 90.3
bln rupees as against 113.35 bln rupees in the month-ago period,
estimates by these firms show.
The petroleum ministry had said the government would strive to
mitigate the revenue losses of these companies, but ruled out raising
fuel prices on a regular basis as a bailout measure.
However, we expect ONGC shares to hog the limelight next week on
reports that its overseas investment arm could be on a favourable
ground in its bid to acquire London Stock Exchange-listed Imperial
Energy with oil and gas fields in the Commonwealth of Independent
States, especially Russia.
A senior oil ministry official said that ONGC Videsh's $2.5 bln
bid for Imperial is competitive and a decision on the sale is expected
next week.
The official said that OVL may rope in a Russian partner, most
likely
state-run Rosneft, if it emerges a winner to ensure quicker approvals
from Moscow.
Following are this week's closing share prices, in rupees, of
leading oil companies on National Stock Exchange, compared with the
previous week:
Company Closing price Closing price %
Change
Aug 22 Aug 14
Oil and Natural Gas Corp 1,019.20 1,066.30
-4.4
Indian Oil Corp 395.65 441.05
-10.3
Bharat Petroleum Corp 292.95 318.00
-7.9
Hindustan Petroleum Corp 199.70 223.15
-2.8
Reliance Industries 2,244.80 2,276.70
-10.5
Cairn India 247.15 245.75
0.6
Nifty 4327.45 4430.70
-2.3
Sensex 14401.49 14724.18
-2.2
B.Karthick
Research Analyst.
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