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ONGC, Oil India hit 52-week highs as Brent crude climbs above $71/bbl

Brent prices continue to hover above $71/bbl, driven by the prospects of a global demand recovery and OPEC+'s production discipline

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SI Reporter  |  Mumbai 

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Shares of state-owned oil exploration & production companies, Oil and Natural Gas Corporation (ONGC) and Oil India hit their respective 52-week highs on the BSE in intra-day trade on Thursday on rising crude oil prices.

ONGC was up 4.4 per cent to Rs 122.95, surpassing its previous high of Rs 122.30, touched on March 8, 2021. Meanwhile, Oil India gained 3 per cent at Rs 140.70 (fresh 52-week high) in intra-day trade.

Crude oil prices traded higher with benchmark NYMEX WTI crude oil prices were trading 0.16 per cent at $68.94 per barrel for the day. Crude oil prices are trading above near term resistance of $68 rallying on strong demand outlook.

Brent prices continue to hover around $71/bbl, driven by the prospects of a global demand recovery and OPEC+’s production discipline. Positive near-term demand-supply balance with inventory destocking would provide support and unless the OPEC+ deal breaks down, a significant downside risk to oil prices is low.

“Crude oil prices have gained on fuel demand recovery hopes form US, China and Europe after OPEC forecasted higher demand in second half of the year. OPEC+ data shows that by the end of the year oil demand will be 99.8 mb per day versus supply of 97.5 mb per day,” Tapan Patel- Senior Analyst (Commodities), HDFC securities said in a note.

“Oil prices near USD70/bbl and the rise in broader energy complex augur well for ONGC. Our FY22/23 earnings estimates and target price of Rs 130 are based on assumption of USD55- 56/bbl Brent prices, and hence they have a material upside,” analysts at Emkay Global Financial Services said in company update.

ONGC’s first tender of 2mmscmd of KG 98/2 gas is under bidding and supplies are expected to start by July’21. ONGC has sought 10.5 per cent of Brent with a term of 3 to 5 years. As per media reports, this would be followed by a larger 5mmscmd offer by December’21. A total of 7mmscmd is over 10 per cent of ONGC’s current gas output, thereby leading to a sizeable production growth in CY22. ONGC has envisaged 15mmscmd of peak output from 98/2, the brokerage firm said.

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First Published: Thu, June 03 2021. 14:34 IST