HPCL, BPCL, IOC: OMCs rise in weak market after oil prices slip about 2%

Indian Oil marketing companies' (OMC) stocks-- Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL)-- gained up to 4.7 per cent in Tuesday's trade after Brent crude oil price slipped over 2 per cent to a 12-week low on Monday, as per Reuters. 

 

The fall in oil prices is beneficial to oil marketing companies (OMCs) as the cost of acquiring crude oil, the raw material for refining, decreases.   OMCs are businesses involved in the marketing and distribution of petroleum products such as crude oil, gasoline, diesel, kerosene, jet fuel, and other refined petroleum products. Their primary functions typically include purchasing crude oil or refined products, distributing them to consumers, and managing retail operations. These companies are crucial players in the oil supply chain, connecting oil refineries and consumers.

 

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Around 1:27 PM, BPCL shares were up 1.36 per cent, HPCL shares were up 4.53 per cent and IOC shares were up 1.75 per cent. In comparison, BSE Sensex was down 0.28 per cent at 72,883.88. 

 

Brent crude oil futures fell $1.19, or 1.6 per cent, to settle at $71.62 a barrel on Monday, while US West Texas Intermediate (WTI) crude fell $1.39, or 2 per cent, to settle at $68.37. 

 

The downward trend in oil prices came following reports that the Organisation of the Petroleum Exporting Countries and allies like Russia, known as (Opec+), decided to proceed with a planned April oil output increase of 138,000 barrels per day, the group's first since 2022.

 

Opec+ has been cutting output by 5.85 million barrels per day (bpd), equal to about 5.7 per cent of global supply, agreed in a series of steps since 2022 to support the market.

 

Meanwhile, US President Donald Trump's decision to impose 25 per cent tariff on Canada and Mexico and additional 10 per cent tariff dragged the US stocks in Monday's trade. 

 

At close, Dow Jones was down 1.48 per cent, S&P 500 down 1.76 per cent, and Nasdaq down 2.64 per cent.

 

Besides, Asian markets were mixed with mainland China's CSI 300 down 0.06 per cent, Shanghai up 0.22 per cent, Hong Kong's Hang Seng down 0.02 per cent and Japan's Nikkei down 1.2 per cent.