Oil exploration companies’ stocks in focus post Canada Wildfire

Crude oil prices in international market are showing an upward trend from last one month USD 40 to USD 45 per barrel. The crude oil prices have increased more than 65 per cent after hitting multi year lows at about USD 27 because of several reasons such as falling US production; unexpected supply constraints in Libya and the Americas; as well as a weaker dollar.

Globally, crude oil prices are under pressure due to impact of wildfires on Canada’s oil output. There is about one million barrels per day in Canadian supply. Meanwhile, for short term view, crude oil prices have remained under pressure due to overflowing US inventories which are supposed to  reduce after wildfires in Canada. Instead, US commercial crude stockpiles have probably risen last week for the fifth straight week.

Oil exploration companies in India are also feeling the heat in the aftermath of Canada’s wildfire. The oil major companies like Cairn India, Oil and Natural Gas Corporation (ONGC), Oil India, Reliance Industries have fallen in last couple of weeks. Cairn India, ONGC, Oil India and Reliance Industries share prices have reduced by 3.6 per cent, 2.32 per cent, 2.71 per cent and 0.5 per cent on bourses in early trades on an intra day basis.

S&P BSE Oil & Gas index also fell by 3.34 per cent during last couple of weeks. The index decreased by almost one per cent to 9209.11 on an intraday basis.

The oil & gas sector itself is feeling the tremors of the increasing crude oil prices and to add to add to that events like US oil inventory increment data released every week and Canada wildfire are playing their part, and may try to sustain crude oil movement in the range of USD 43 to USD 47. This factor has triggered volatality in the Indian oil exploration company's scrips.