Shares of India’s oil exploration companies as well as those of refining and marketing companies fell sharply on Wednesday following a slump in the global crude oil prices, but aviation companies stocks rose at the same time on hopes of cheaper jet fuel.
The state-run Oil and Natural Gas Corp — India’s largest exploration and production company — fell as much as 2.2% to Rs 165 on BSE today. Its smaller peer Oil India Ltd — another state-run oil producer — also fell by about 1.9% and made the day’s low of Rs 289.85 so far.
On the other hand, stocks of oil refiners fell too, despite the prospects of fall in costs of their further purchases of crude oil, as concerns prevailed over losses on sale of products from their existing inventory built up at higher prices earlier.
The state-run behemoth Indian Oil Corp fell as much as 0.8% to the day’s low of Rs 408.1. Bharat Petroleum Corp shed 1.77%, while Hindustan Petroleum Corp too fell 1.65%. Oil refining companies make products such as petrol and diesel from crude oil brought from both India’s exploration companies and international markets. Usually, falling crude oil prices lower their costs, but often inventories losses weigh on their finances.
Global crude oil prices fell on Wednesday to around multi-month lows as investors were not convinced that even a strong compliance by oil producing nations to cut output will support prices in the near term in the face of rising shale production in the US. Global benchmark Brent was down 11 cents, or 0.2%, at $45.91 barrel, extending its near 2% fall in the previous session to its lowest settlement since November. The price of the Indian basket of crude oil fell to $45.84 per barrel on June 19 from $45.94 per barrel on June 16 — the previous trading day.
Compliance with an agreement by the Organization of the Petroleum Exporting Countries and other producers to cut output by 1.8 million barrels per day (bpd) for six months from January reached its highest in May since curbs were agreed last year, Reuters reported.