Oil stocks were in focus today as Brent crude futures surged over $70 a barrel on Monday for the first time since Coronavirus pandemic began
Oil stocks were in focus today as Brent crude futures surged over $70 a barrel on Monday for the first time since Coronavirus pandemic began, following the reports of attacks on Saudi Arabian oil facilities. S&P BSE Oil & Gas index reached a record high of 16,588.30 level, led by gains in GAIL, ONGC (Oil and Natural Gas Corporation Ltd), Indian Oil Corporation Ltd, which hit their respective new 52-week highs. Also, Reliance Industries Ltd (RIL) stock price jumped 2.4 per cent to Rs 2,231 apiece. In the afternoon deals, Brent crude futures for May were up 1.64 per cent to $70.50 a barrel. Moreover, after a gap of 13 months, Brent crude oil price had breached the $60 a barrel mark.
Similarly, the S&P BSE Energy index too scaled a fresh all-time high of 6,925.72 level. The top gainers in the index were Hindustan Oil Exploration Co., Oil India Ltd, Coal India, Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL) among others. The index had hit a 52-week low of 3,011.34 on March 23, 2020, on the back of coronavirus-induced lockdown in most of the countries around the world.
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Besides attacks on Saudi Arabian oil facilities, the rally in oil prices was fuelled primarily by the decision of OPEC and its allies not to increase production in April. Sriram Iyer, Senior Research Analyst at Reliance Securities, said that the only factor limiting upside was a stronger Dollar. The dollar has hit its highest since November on Friday. The oil rig count, an early indicator of future output, rose one to 310 in the week to March 5, energy services firm Baker Hughes Co said. CFTC data showed that speculators cut their net long US crude futures and options positions by 3,323 contracts to 399,220 in the week to March 2. Yemen’s Houthi forces fired drones and missiles at the heart of Saudi Arabia’s oil industry, including a Saudi Aramco facility at Ras Tanura vital to petroleum exports.
Iyer added that technically, WTI Crude Oil has given a fresh breakout above $67.00 level indicating a further upside movement up to $67.90-$68.45 levels. Support is at $66.95-$66.10 levels. On the domestic front, technically, MCX Crude Oil will continue to trade on bullish momentum up to 4910-4970 levels. Support is at 4800-4735 levels, he added.