Oil E&P stocks decline as crude oil prices slide

Shares of three oil exploration and production firms declined by 1.55% to 2.01% and shares of three PSU OMCs rose by 0.62% to 1.53% at 10:00 IST on BSE as crude oil prices extended losses.

Meanwhile, the S&P BSE Sensex was down 5.81 points or 0.02% at 24,819.23.

Among oil exploration and production companies, ONGC (down 2.01%), Cairn India (down 1.92%), and Oil India (down 1.55%) declined. Reliance Industries (RIL) rose 0.14%. Fall in crude oil prices would result in lower realizations from crude sales for oil exploration firms.

Among shares of public sector oil marketing companies (PSU OMCs), BPCL (up 0.63%), HPCL (up 0.62%), and Indian Oil Corporation (up 1.53%) edged higher.

Lower crude oil prices could decrease under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at controlled prices. The government has already freed pricing of petrol and diesel. However, a weakness in rupee against the dollar will restrict the benefit of falling global crude oil prices to that extent. A weak rupee raises the cost of imports.

Brent crude oil futures edged lower on a stronger dollar and worries over Chinese demand. Brent for February settlement was currently down 38 cents at $31.17 a barrel. The contract had lost $2 a barrel or 5.96% to settle at $31.55 a barrel during the previous trading session.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 66.87, compared with its close of 66.81 during the previous trading session.

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