BSE oil and gas index slips by 2 per cent

After hitting a multi – year low of 27 USD, the prices of crude oil have again increased by almost 70 per cent in the last couple of weeks. However, the international oil prices are showing an upward trend, and are able to hover around USD 48 per barrel. The crude oil prices on Monday are trading at USD 48.66, up by 1.34 per cent.

In the last week there were two major events that kept the oil prices tight. The Canadian oil production was hampered due to the fire which had erupted in their oil and sand mines. The fires have added to a deficit of around 72,000 barrels per day. China, the world’s fourth-largest oil producer, pumped 5.6 per cent less crude year-on-year in April.

These two major events gave a momentum to the crude oil prices internationally, as they both have impacted the supply.

However, BSE oil and gas index for the past 15 days are down by 2 per cent. The index comprises of 10 major oil exploration companies in India: namely Reliance, ONGC, GAIL, CAIRN India, BPCL, Hindustan Petroleum, Castrol India, Oil India Ltd., Indian Oil Company and Petronet LNG limited.

Reliance has shipped less oil in April and has planned to shut down some units for maintenance, which has impacted the share prices on an intra –day basis. The demand for the oil in the country has grown steadily, however the estimates of the oil requirements by these oil exploration companies has been above average. ONGC last week, has cancelled 27 ships to cut costs, which has resulted in the prices of shares on Monday to go down by 1.64 per cent.

Cairn India has also been suffering from the cost, and recently the company has extended its debt obligation of USD 1.25 billion by 2 years, which means that the firm is unable to recover its cost.

The shares of the Indian oil exploration have just corrected themselves fundamentally and have been down due to lack of the company’s operational efficiency. Also 4 major oil exploration companies, of the order of IOC, GAIL, Petronet LNG and Bharat Petroleum are expected to declared their Q4FY16 results. With the April volumes down, the investors have avoided the scrips on the verge of anticipated results.