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Informist, Thursday, Mar. 13, 2025

MUMBAI - The near-term outlook for Indian oil marketing companies is positive, with crude oil prices hovering in the range of $70-$75 per barrel and a slowdown in foreign portfolio investor sell-off, analysts said. However, further depreciation of the rupee and an increase in natural gas prices could offset the gains made from lower crude oil prices. In February, FPIs net sold shares worth INR nearly 34 billion of oil, gas, and consumable fuel companies, according to data available on the National Securities Depository.

Brent crude oil futures were volatile this week, which fell in the first half and the rose slightly in the latter half. At 1728 IST, Brent crude May futures on the Intercontinental Exchange were down 0.5% at $70.60 per barrel. In two months, the Brent Crude futures have seen a sharp decline of 11%, down from the 2025-high of $79.48 per barrel it had hit on Jan. 15.

Crude oil prices are expected to stay in the $70-$75 per barrel range as oil inventories will likely rise gradually and put pressure on crude oil prices later this calendar year and in 2026 due to an increase in production from the Organization of the Petroleum Exporting Countries and its allies, and production growth from non-OPEC nations.

In its oil market report for March, OPEC said that the market structure of all the major crude oil benchmarks--such as the Intercontinental Exchange's Brent--has flattened compared with the previous month, but the futures curves remain in backwardation. When market is in backwardation, the forward price of a futures contract is lower than the spot price. This implies market believes crude oil to face a downward pressure in the near-term. Hedge funds and other money managers closed a large volume of bullish position in ICE Brent and NYMEX West Texas Intermediate, and sharply raised the short position to the highest in more than a year. This fuelled volatility and accelerated declines in oil futures prices, the cartel said.

The refining margins for the downstream players have improved, with the benchmark Singapore gross refining margin increasing slightly as lower naphtha inflows, limited gasoline supply, and high-sulphur fuel supply concerns exerted upward pressure on their respective crack spreads, OPEC said. A crack spread refers to the overall pricing difference between crude oil and the petroleum products refined from it. 

The US Energy Information Administration has decreased its forcast for Brent Crude prices to $74.22 per barrel this year, against $74.50 per barrel projected last month. For 2026, the agency expects Brent Crude prices on the Intercontinental Exchange to average of $68.47 per barrel against its previous forecast of $66.46 per barrel. However, the agency believes the crude oil prices will see some upward pressure in the September quarter due to possible fall in crude oil production in Iran and Venezuela due to the sanctions imposed by the US.

Recently, OPEC and its allies had announced that it will proceed with the gradual unwinding of the voluntary production cuts from Apr. 1. "...we still anticipate OPEC+ members will produce less than the organization's announced targets to limit increases in global oil inventories," US Energy Information Administration said. The agency expects the production growth will be led by countries outside of the OPEC and its allies, such as the US, Canada, Brazil, and Guyana. These nations will increase production by 1.2 million barrels per day in 2025 and by 1 million barrels per day in 2026.

The supply of crude oil from countries not part of the Declaration of Cooperation is estimated to have expanded by 1.0 million barrels per day in 2025 to 54.2 million barrels per day, OPEC said in its March report. The main growth drivers are expected to be the US, Brazil, Canada, and Norway, with the main decline anticipated in Angola, the oil cartel said. Declaration of Cooperation serves as a framwork for cooperation and coordination between the OPEC and non-OPEC countries working towards the stabilisation of the global oil market.

Earlier this week, Saudi Aramco lowered its crude oil prices for Asian buyers in April, the first reduction in three months. The price cut is in line with market expectations and follows the decision of OPEC and its allies to raise production from April. 

For 2026, the US EIA expects the annual average price of natural gas to be around $4.5 per million British thermal units, up 8% from the previous forecast. The rise in the natural gas prices could offset oil marketing companies' gains from lower crude oil prices as India imports more than half of its natural gas requirements.

On Wednesday, the Lok Sabha passed the Oilfields (Regulation and Development) (Amendment) Bill, 2024, aimed at promoting ease of doing business in the oil and gas exploration and production sector. This is a positive news for upstream companies as the new act will help in attracting more investments to oil and gas exploration in the country. 

On Thursday, the Nifty Oil & Gas index closed 0.4% lower at 10021.80 points, with nine out of the 15 constituents in the red. The index fell 0.8% this week. Of the major oil stocks, Bharat Petroleum Corp., Indian Oil Corp., and Oil India rose during the week, while Oil and Natural Gas Corp., Hindustan Petroleum Corp., and Reliance Industries were the major laggards. The Indian equity market will be shut Friday on account of Holi.

TOP HEADLINES
* OPEC retains global oil demand growth estimate for 2025, 2026 at 1.4 mln bpd
* Lok Sabha passes bill to promote ease of doing business in oil, gas sector
* US EIA expects Brent crude to average $75 per bbl in third quarter of 2025
* Saudi Aramco lowers crude oil prices to Asia for first time in three months
* ONGC arm ONGC Petro to exit from Dahej special economic zone in Gujarat
* US natural gas stocks decline by 80 bcf in week ended Feb 28, says EIA
* PRESS: US seeks low tariff on petrochem pdts; India wants more raw material

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

Reported by Akshay V. Johnson
Edited by Deepshikha Bhardwaj

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