OMCs gain in the bargain as oil prices fall

Although the Indian markets traded flat to negative, OMCs have something to cheer. Brent crude oil which is at USD 54.86 per barrel has fallen 0.35 per cent according to the report that came at 1.40 am EST. WTI crude oil (Nymex), is at USD 52.66, down by 0.55 per cent.

The stocks of oil marketing companies like  Castrol India Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation are up  in the range of 1.52 to 0.20 per cent on an intra-day basis. As crude oil prices go down, profitability of oil marketing companies in near term tends to rise.

There is no new development on the OPEC deal. However, the oil prices have generally fallen as the dollar gained. Although the dollar index is low in the early trade of December 23, nevertheless it is close to its 14 year high.

Oil prices were trading around their highest levels since mid-2015, supported by a deal between the Organisation of the Petroleum Exporting Countries and non-OPEC oil producers to cut output by almost 1.8 million bpd from January 1, 2017.

The phenomenon could be short lived and oil prices are expected to gain once the freezing of production from OPEC and Non- OPEC nations begins.