Shares of Oil Marketing Companies (OMCs) witnessed a decline today on January 6. Shares of Hindustan Petroleum (HPCL), Bharat Petroleum (BPCL) and Indian Oil Corporation (IOC) closed in the red. In fact, the trend of increase in crude oil prices continues this week also, which started from the first week of the new year. Due to this, there is heavy selling in these shares. HPCL shares fell by 5.97 percent today and closed at Rs 388.50 on BSE. Besides, BPCL shares fell 3.69 per cent and IOC shares fell 3.84 per cent.
What is the reason for the decline in OMC shares?
Recently the price of Brent crude has become $76.30 per barrel and the price of West Texas Intermediate (WTI) has become $73.77 per barrel. Both have registered strong growth in the last week. Beijing is stepping up fiscal stimulus to revive the faltering economy, announcing on Friday it will sharply increase funding from ultra-long dated treasury bonds through 2025 to boost business investment and consumer-boosting initiatives .
In a change in its economic policy, Beijing has announced to increase fiscal stimulus through ultra-long dated treasury bonds in 2025. Its objective is to promote business investment and consumer spending. Also, its central bank said on Friday that it will cut banks’ reserve requirement ratio and interest rates at an appropriate time.
India Ratings and Research (Ind-Ra) has maintained ‘neutral’ outlook on the oil and gas sector for the financial year 2025-26 (FY26). The agency expects the credit profile of upstream oil companies to remain dependent on crude oil prices.
Ebitda generation for upstream companies may decline due to softening oil prices and decline in production from old fields. However, the impact of lower crude oil prices is expected to be offset by the expected increase in production due to removal of special excise on crude oil production and new discoveries. However, Ind-Ra said that despite the current fall in crude oil prices, upstream companies will continue to earn healthy margins as the price remains above $65 per barrel.
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