Oil Stocks Outlook for the week (28.05.2012 - 01.06.2012) Stocks of state-owned oil marketing companies are seen moving in a narrow range next week as better-than-expected Jan-Mar earnings will support the stocks even as the initial euphoria over the sharp hike in petrol prices fizzles out. Petrol accounts only for a fraction of sales of the oil marketing companies and more than half of the revenue loses are incurred on sale of diesel. The Wednesday's announcement of highest-ever hike in petrol prices 6.28 rupees for a litre had raised hopes of a similar move by the government on prices of regulated fuels. However, the meeting of an empowered group of ministers that was to taken place yesterday to consider a revision in prices in diesel and cooking gas, was cancelled as key allies of the United Progressive Alliance opposed any hike in prices of the politically- sensitive fuels.
If diesel prices are not hiked in the near term it will result in higher consumption of the fuel as petrol is 80% costlier, and compound the revenue losses of the oil retailers in the long term. Material price hike in diesel is needed for any substantial reduction in subsidy burden. Meanwhile, crude prices continue to soften and the rupees, too, has made some recovery after hitting an all-time low of 56.37 for a dollar on Thursday. This bodes well for the PSU oil retailers Indian Oil Corp Ltd, Hindustan Petroleum Corp Ltd and Bharat Petroleum Corp Ltd. At current levels, a change of every one rupee in the value of dollar is equivalent of $3 per barrel change in crude prices for Indian oil companies, as they import most of their requirement. The rupee ended at 55.37 to a dollar yesterday, compared with 54.42 last Friday. The Indian basket of crude declined further to $104.11 a barrel on Thursday from $105.79 last week. The Street may trade cautiously on the three stocks and is likely to take cues from crude and rupee-dollar movement. A decision on the diesel and cooking gas prices will be keenly watched and may provide the main direction for the three stocks. -- You received this message because you are subscribed to the Google Groups "Kences1- Rupeedesk" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/kences1?hl=en.
