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| Oil stocks slip on rising crude oil prices, fall in margins |
| BS Reporter / Mumbai Jul 28, 2009, 00:14 IST |
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The share price of top oil and gas companies fell today, as there was a rise in global crude oil prices to $69 a barrel and fall in the gross refining margins (GRMs) declared by the sector major Reliance Industries (RIL).
The shares of RIL, Reliance Petroleum, Oil and Natural Gas Corporation (ONGC) and Gail India fell between 2.8 to 4.02 per cent, while the Sensex managed to close the day on a flat note losing only 0.03 per cent from its previous close. The BSE Oil & Gas index was down 3.09 per cent and some of the other stocks in the index including Essar Oil, Hindustan Petroleum Corporation (HPCL), Indian Oil Corporation (IOC), Cairn too fell between 0.4 to 1 per cent.
“Shares of oil marketing companies were falling as the crude oil prices have gone up. But standalone refinery shares fell as a $7.5 per barrel GRM declared by RIL last week is a cause of concern,” said independent equity advisor S P Tulsian. Tulsian is of the view that if GRM remain stagnant, then it would become difficult for other smaller refineries to post good results in the coming few months.
The net profits of RIL witnessed a sharp drop of about 11.5 per cent in the second quarter as the companies’ exports and gross refining margins (GRMs) dropped sharply from the previous corresponding quarter’s $15 per barrel to $7.5 per barrel this quarter. Analysts said that the fall in profit of RIL for the third straight quarter indicated that global demand for oil had not improved and GRMs would remain under pressure for some more time.
The share price of RIL today fell nearly 5 per cent during the day to touch a low of Rs 1,908 on BSE. The share, however, staged a recovery and was down 3.73 per cent to close at Rs 1,938. The shares of RIL and RPL together have a weight of nearly over 16 per cent in the Sensex.
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