Several oil companies are in the spotlight today. Oil And Natural Gas Corporation (ONGC) and Oil India’s shares rally as much as 10% intra-day. This is due to the surge in crude oil prices. Crude oil jumped after a winter storm disrupted the US supply. Adding to that, temporarily halted Gulf Coast exports also led to supply concerns.
ONGC jumped 8.7% to an intra-day high, while Oil India shares soared 9.7%.On the Multi Commodity Exchange (MCX), crude oil prices for the February contract were trading Rs 82 or 1.44% higher at Rs 5,787 per barrel in 32,055 lots.
Crude oil prices
WTI crude oil futures hovered above $62 per barrel today morning after rallying nearly 3% in the previous session. The prices have reached their highest levels in roughly four months. Ajay Suresh Kedia of Kedia Advisory said that prices were supported by significant supply disruptions caused by a severe winter storm, which reduced the US crude production by up to 2 million barrels per day and temporarily halted Gulf Coast exports. Ongoing icy and wet conditions are expected to slow the restart of energy infrastructure.
“Geopolitical risks also remain in focus, with traders monitoring the US military buildup in the Middle East and potential developments involving Iran. Further support came from API data showing an unexpected drawdown in US crude inventories, while a sharply weaker dollar enhanced the appeal of oil for global buyers,” he said.
Crude oil prices also gained as the dollar index weakened sharply, slipping to a near four-year low amid a rebound in the Japanese yen and other major currencies. In addition, better-than-expected US and Chinese GDP data released last week further boosted sentiment and supported crude prices.
ONGC stock performance
The share price of ONGC has given a return of 10.75% in the last one week. The stock has surged 14.5% in the past one month and has risen 12% in the past six months. ONGC’s stock performance has raised investors’ wealth by 8% over the previous one year.
Nifty Oil & Gas
To compare, the Nifty Oil and Gas index has increased 2.9% in the past one week. The index, however, has fallen 1.7% in the last one month and over the last 1 year, it has gained 15.5% in the previous one year.
Elara on Oil & Gas sector stocks: The macro environment supportive
Outlining the challenges for the oil and gas sector, Elara Capital highlighted that the macro environment remains supportive. According to the brokerage house, the refining margins remain supported by tightness in global middle-distillate, including restrictions by the EU on Russian-linked product flows. The brokerage believes crude below $65/bbl is supportive for retail margins and LPG economics. The IEA expects moderating oil demand growth and surplus supply into CY26, reducing crude price risk for OMCs.
Nomura on Oil and Gas
Almost 2 months ago, Nomura, in a report, had stated that Indian refiners may also gradually find ways to shift towards non-sanctioned Russian entities, use of shadow carriers, adopt ship-to-ship transfers, etc in the future to balance geopolitical and economic considerations, given the current demand-supply dynamics in the global crude market.