Shares of India’s oil marketing companies (OMCs) rose on Wednesday as crude oil prices continued to weaken, reaching one-month lows. Indian Oil Corp, HPCL, and BPCL rebounded after declining on Tuesday following a sharp downgrade by Investec, which flagged that shrinking diesel marketing margins posed a significant earnings risk despite stronger refining margins. By around 10:30 a.m., HPCL gained 2% to Rs 464.35, BPCL rose 2.2% to Rs 363.65, and Indian Oil added 0.7% to Rs 165.3.
The bounce in OMC stocks corresponded with falling crude prices. Brent crude dropped 1.4% on Tuesday to USD 62.48 per barrel, its lowest intraday level since October 22, while WTI fell 1.5% to USD 57.95. The decline followed signs that U.S.-led diplomatic efforts to end Russia’s war in Ukraine were progressing and forecasts of a potential supply surplus. Early Wednesday saw modest technical gains, with Brent up 27 cents to USD 62.75 and WTI rising 24 cents to USD 58.19. Analysts described these upticks as fragile, likely driven by short-covering and softer inventory signals.
For OMCs, crude under USD 63 per barrel eases pressure on fuel marketing margins, which had turned negative last month, while refining margins remained robust. This relief is crucial given the sector’s higher sensitivity to marketing margins, as highlighted in Investec’s caution.
