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Informist, Friday, Jan. 24, 2025

MUMBAI – The outlook for oil stocks in the near term seems negative, especially for oil marketing companies, as the average global crude oil prices have increased sharply till date in the March quarter, which has led to lower average refining margins, an analyst tracking the sector at a domestic broking firm said. However, in the medium-to-long term, the outlook for oil refining players looks positive, considering the potential fall in global crude oil prices and the depreciation of the rupee.

"I'm also going to ask Saudi Arabia and OPEC (the Organization of the Petroleum Exporting Countries) to bring down the cost of oil," US President Donald Trump said at the World Economic Forum at Davos, Switzerland, Thursday. The Brent Crude futures price fell even as Trump spoke. "The United States has the largest amount of oil and gas of any country on Earth... Not only will this reduce the cost of virtually all goods and services, it will make the United States a manufacturing superpower," the president said.

At 1830 IST Friday, Brent Crude futures traded on the Intercontinental Exchange were up 0.5% at $78.70 per barrel. Trump has vowed to cut taxes on US crude oil producers and impose tariffs on foreign goods, which will have a depreciating effect on the rupee, which closed at 86.20 a dollar.

The rise in crude oil prices and depreciation of the rupee could hit the profitability of oil marketing companies, which use crude as a key raw material. India depends on imports to meet most of its crude oil requirement. On the other hand, upstream companies could see a boost as higher crude oil prices mean better realisations.

On the earnings front, Oil and Natural Gas Corp. and Indian Oil Corp. are scheduled to release their December quarter results this week. ONGC's net profit is expected to fall 1.1% on year to INR 97.85 billion and revenue is expected to fall 8.9% to INR 316.82 billion, according to an average of estimates from 13 broking firms. Indian Oil's net profit is expected to fall 31% on year to INR 55.63 billion and revenue is expected to fall 10.6% to INR 1.78 trillion, according to an average of estimates from 13 broking firms.

Oil refiners Hindustan Petroleum Corp. and Bharat Petroleum Corp. announced their results this week. BPCL's net profit for the December quarter jumped up almost 37% from a year ago to INR 46.5 billion, but missed the Street's estimates. Its revenue declined 1.8% to INR 1.3 trillion, higher than the INR 1 trillion analysts had expected. An analyst tracking the sector also said BPCL's gross refining margins are currently on the lower end. Asked about expectations for the sector from the upcoming Union Budget, the analyst said he expects the government to provide subsidies to oil marketing companies, which could be a positive trigger for them. 

HPCL Thursday reported a nearly sixfold jump on year in net profit for the December quarter at INR 30.23 billion. However, it was below the market's expectation of INR 32.22 billion. The public-sector company's net revenue was almost flat on year at INR 1.18 trillion but beat analysts' estimate of INR 1 trillion. HPCL does not see any disruption in the supply of crude oil from Russia despite the additional sanctions imposed recently by the US on Russian oil. About 35-40% of HPCL's crude oil consumption per month is met by Russia, the company's management said.

TOP HEADLINES
* Analyst Concall:HPCL mgmt sees no disruption in crude oil supply from Russia
* Earnings Outlook: High base to drag down IOC's Oct-Dec PAT, revenue on year
* Earnings Review: HPCL Oct-Dec PAT jumps nearly 6-fold but misses estimate
* Analyst Concall: BPCL sees cut in Russian crude supply hitting margins ahead
* Earnings Outlook: Refining, marketing margins seen boosting HPCL Oct-Dec PAT
* BPCL board okays $121-mln plan to develop Indonesian oil, gas block
* Earnings Review: BPCL's Oct-Dec PAT jumps up 37% YoY as crude oil cost falls
* TV: May achieve 20% ethanol blending in petrol by Feb, says oil minister
* SC junks demand for excise duty on oil cos for inter-supply of petroleum pdt
* PRESS: Oil cos to float tender for 1.1 bln litres ethanol made from FCI rice
* RIL completes acquisition of Reliance New Energy Battery
* Oil cos buy 846 mln ltr ethanol Dec, achieve 18.2% blending, highest so far
* BPCL, Praj Ind to form JV to set up compressed bio gas plants across India

Following are the resistance and support levels for the sector's key stocks for next week, as per calculations based on their prices on the National Stock Exchange:

End

US$1 = INR 86.20

Reported by Akshay V. Johnson
Edited by Rajeev Pai

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