ONGC, Oil India shares jump up to 10% to new record highs as oil prices rise

ONGC, Oil India shares rise

• ONGC and Oil India shares surged up to 10 percent amid rising global oil prices
• US winter storm and Middle East tensions drove oil prices higher
• ONGC hit a 52-week high after signing shipbuilding contracts for ethane carriers

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The shares of state-run Oil & Natural Gas Corporation (ONGC) and Oil India jumped up to 10 percent in trade on January 28, tracking the sharp rise in oil prices. This comes amid supply concerns after a severe winter storm disrupted US crude output and exports.

Additionally, rising tensions in the Middle East also supported oil prices. Brent crude futures rose 33 cents to $67.90 a barrel, while WTI Crude futures gained 42 cents to trade at $62.81 per barrel, as seen at 11 am.

The two stocks were among the top gainers on the Nifty Oil & Gas index, which was up more than 3 percent at 11,735.55.

Why are oil prices rising?

Oil extended gains as analysts estimated that US producers lost up to 2 million barrels per day or roughly 15 percent of national output over the weekend as the storm strained energy infrastructure and power grids.

Crude and liquefied natural gas exports from U.S. Gulf Coast ports tumbled to zero on Sunday, Reuters quoted ship tracking service Vortexa as saying. The report added that Toshitaka Tazawa, an analyst at Fujitomi Securities, said that a loss of production in Kazakhstan is also underpinning the rally in oil prices.

"But once supply fears ease, selling pressure is likely to return," Tazawa added. He further said that an estimated global crude supply surplus this year amid geopolitical risks, including the Middle East tensions, could keep WTI trading around $60 a barrel for now.

Tensions between US and Iran are also supporting oil prices. Reuters reported citing sources that a US aircraft carrier and supporting warships have arrived in the Middle East. This has raised the prospect of US President Donald Trump following through on his threat to attack Iran's senior leadership in response to the violent crackdown on nationwide protests, said ANZ analysts in a note.

ONGC share price:

ONGC shares jumped more than 7 percent to hit a fresh 52-week high of Rs 266.2 apiece. Earlier yesterday, ONGC announced that it entered into Ship Building Contracts (SBCs) with South Korea’s Samsung Heavy Industries for the construction of two state-of-the-art Very Large Ethane Carriers (VLEC).

“ONGC and MOL Japan have set up two joint venture companies, Bharat Ethane One IFSC Pvt. Ltd. and Bharat Ethane Two IFSC Pvt. Ltd., in GIFT City, Gujarat, with each company owning and operating one VLEC. These vessels will support the transportation of about 600 KTPA of ethane for OPaL, a subsidiary of ONGC,” the company said in a press release.

The VLECs will be Indian-flag, with a cargo capacity of one lakh cubic meters each, it added.

ONGC shares have gained nearly 9 percent in the past five days, and more than 12 percent in the past one month.

Oil India share price:

Oil India shares jumped nearly 10 percent to hit a fresh 52-week high of Rs 492 apiece. The stock has gained more than 11 percent in the past five days, and over 18 percent in the past one month.

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