Stock Market today: Hindustan Petroleum Corporation (HPCL), Bharat Petroleum Corporation Ltd (BPCL) , Indian Oil Corporation (IOCL) share price gained up to 6% in the intraday trades on Tuesday. The softening Oil prices boosted street sentiments driving gains for these upstream oil Marketing companies HPCL, BPCL ,IOCL share price.
Brent crude oil Prices that had started rising and rose to $87 a barrel levels by June end, however have now cooled down to below $80 a barrel levels.
Analysts have been expecting Oil price to cool down as voluntary production cuts by OPEC ( Organization of the Petroleum Exporting Countries ) and its allies are likely to ease. Analysts at Motilal Oswal Financial Services already had lowered their Brent oil price assumption to $75 a barrel in FY26; They had cut their Brent price assumption by 7% and 12% for FY25 and FY26 respectively to $78.8 a barrel and $75 per barrel (versus old assumption of $85 a barrel for both FY25/FY26).
The lower crude prices relieve concerns on marketing margins of Oil marketing companies and their share prices. The fuel prices at retail level had remained unchanged during June quarter while oil prices rose putting pressure on the margins OMCs earn by selling auto fuels through their outlets.
Thus after a weak Q1 as was also evident from HPCL financial performance, the outlook has improved as we move ahead in Q2.
Gross refining margins have remained at $3-4 per barrel, but marketing margins have remained healthy at Rs3-7 a liter, said analysts at HSBC Research in their mid-July report. For OMCs, this has offset the impact of weak diesel and gasoline cracks said HSBC analysts .
GRM weakness while is attributable to weak product demand and tight crude oil supply due to OPEC production cuts and North Sea maintenance. Over time many analysts expect refining margins to improve as there are limited incremental capacities that are coming up.
While recent signals suggest a gradual move to populist measures with some state governments resorting to tax cuts and now privatisation looking increasingly unlikely, said analysts at HSBC, nevertheless they largely see continuity in policy initiatives and had maintained Buy ratings on BPCL, HPCL, IOCL share prices
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softening oil prices lifted sentiments, HPCL results also supported the sentiments.
