Oil Marketing Companies (OMCs) — Hindustan Petroleum Corporation Ltd (HPCL), Bharat Petroleum Corporation Ltd (BPCL) and Indian Oil Corporation (IOC) — surged up to 5.1 per cent in Tuesday’s intraday trade on the BSE. The rally came after Brent crude oil futures fell more than 3 percent, near their lowest level in two weeks today.
A fall in oil prices is beneficial for OMCs because their costs of acquiring crude oil for refining fall. This can lead to a reduction in the operational costs of MOCs.
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At around 12:25 p.m., shares of HPCL were up 5.04 percent, BPCL 2.16 percent and IOC 1.15 percent. In comparison, the BSE Sensex was down 0.23 percent at 81,786.44 around the same time.
Brent crude oil futures, last seen, fell 3.6 percent and held steady at $74 per barrel. Prices have fallen nearly $5 so far this week, nearly erasing cumulative gains made in the seven sessions through last Friday, when investors worried about supply risks as Israel planned to respond to an Iranian missile attack.
On Monday, Brent crude oil futures fell 2 percent, almost a $5 drop so far this week.
The weakness in oil prices came after a news report suggested Israel was prepared not to strike Iranian oil targets, easing fears of a supply disruption. The statement comes amid expectations that Israel will strike in retaliation for Iran’s missile attack on Israel on October 1.
In another report, the Organization of the Petroleum Exporting Countries (OPEC) on Monday revised downwards its forecast for growth in global oil demand in 2024.
OPEC also lowered its forecast for growth in global oil demand for next year, from 1.74 million bpd to 1.64 million bpd.
OPEC is a group of oil-producing countries that coordinate their oil policies to manage oil production and prices. It was founded by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.
Meanwhile, U.S. West Texas Intermediate futures fell $2.72, or 3.7 percent, to $71.11 a barrel. The contract fell to $70.75, its lowest level since October 3.
First publication: October 15, 2024 | 1:20 p.m. STI
