Oil & Gas stocks dip as crude price rises, but retail price remains unchanged

Despite dynamic pricing, wherein the domestic retail price of petrol and diesel are aligned to international crude oil prices, there has been no hike in domestic fuel prices from the last week's Tuesday, even as global crude oil prices spiked.

Earlier, the Petroleum Ministry had categorically denied that government had asked Oil Marketing Companies (OMCs) to absorb the hike in International crude oil prices. According to news reports, the government has asked OMCs to absorb price hikes and the same is evident in the unchanged fuel prices at the pumps. It is understood that the government might have resorted to stabilizing domestic fuel prices to uplift public sentiments before the decisive state assembly elections in Karnataka.

Globally, crude oil prices have been rising steadily and is now trading at above US$75 per barrel. The crude prices are in a uptrend since OPEC and Russia are expected to ease supplies as their target of reducing global oil inventories have been met. In addition, the geopolitical tension arising from review of Iran nuclear deal and Venezuelan election have fueled the uncertainties. Also, the Saudi government has expressed that they are comfortable with crude oil trading above US$75. It is believed that the Saudi regime will benefit if the oil price rises during Saudi Aramco's slated IPO.

BSE Energy and Nifty Energy Index dipped close to 2 per cent on Monday, with BSE Energy Index down 1.99 per cent and Nifty Energy down 1.86 per cent. Also, the BSE Oil & Gas Index was down 1.08 per cent. India's private oil major Reliance was down 3.29 per cent, much of the dip in these energy indices can be attributed to Reliance as it has significant weightage in the indices. 

The stocks of major state-run companies such as Bharat Petroleum, Hindustan Petroleum, Indian Oil dipped on Monday. BPCL closed at Rs. 388.15 per share, down 0.24 per cent, IOC closed at Rs. 162.30, down 0.25 per cent, HPCL closed at Rs. 304.65, down 0.41 per cent, Petronet closed at Rs. 226.05, down 0.59 per cent, IGL closed at Rs. 288.60, down 1.10 per cent, GAIL closed at Rs. 325.00, down 1.41 per cent, Reliance closed at Rs. 963.10, down 3.18 per cent. The only major exception to this dip in energy stocks was Selan Exploration Technology which was up 10 per cent and was stuck in upper circuit at Rs. 259.15 per share.