Shares of Oil & Natural Gas Corporation have risen more than 12 percent over the past month tracking gains in global crude oil prices.
Global crude oil prices have risen more than 14 percent in the past 30 days as traders see a continued rise in demand and supply fails to keep up. The 400,000 barrel per day output hike recently decided by Oil and Petroleum Exporting Countries is not expected to meaningfully bridge the gap between demand and supply.
Further, OPEC’s dwindling spare capacity is seen as a major hurdle in oil-producing countries being able to increase output to keep up with surging global demand as global economies open post-COVID-19 outbreak.
The surge in global crude oil prices has also been buttressed by rising geopolitical tensions in Eastern Europe where the US has reportedly warned Ukraine of a possible Russian invasion “anytime now”.
Traders are worried that Russia’s aggressive stance could force North American Treaty Organization members to impose sanctions on the European country that could result in a possible reduction in the export of crude oil from Russia.
The rise in oil prices is beneficial for ONGC given that its average crude realisation at the end of the September quarter was still near the $70 per barrel mark suggesting significant room for an upward revision.
Analysts expect the company to report strong earnings for the December and March quarters because of the rise in oil prices and natural gas prices during the period.
Shares of ONGC were up 0.3 percent at Rs 170.10 on the National Stock Exchange.
Source:moneycontrol.com