Rising crude prices could put OMC margins under pressure, hurt stock rally

While analysts expect excise duty cuts or price hikes to offset pressure on marketing margins, there is some uncertainty currently; Oil producers seen gaining

The S&P BSE Oil and Gas index (up 1.7 per cent) outperformed the S&P BSE Sensex (up 0.07 per cent) on Monday, despite Brent crude oil prices surpassing the $70 per barrel-mark.

From a low of $36.9 hit on October 30, 2020, Brent is up 92 per cent, and analysts see further upside. Over the short-term, analysts expect Brent crude to hit $80 as OPEC+ countries curtail production, and there is recovery in fuel demand amid gradual ‘unlock’ of economies across the globe.

“In the near-term, despite prices trading in an overbought zone, there is no reversal pattern on charts