Indian Oil, HPCL, BPCL stocks rebound after Tuesday’s fall, rise 1-2 percent as crude stays below $63/barrel

Indian oil marketing company (OMC) stocks climbed on Wednesday as crude oil prices remained under pressure, extending their decline to one-month lows. The rebound in Indian Oil Corp, HPCL and BPCL stocks comes a day after the three PSU oil marketers fell on Tuesday following a sharp downgrade from Investec. The brokerage warned that weakening diesel marketing margins posed a material earnings risk despite stronger refining margins.

At around 10.30 am today, HPCL stock was up 2 percent at Rs 464.35, BPCL gained 2.2 percent to Rs 363.65, while Indian Oil rose 0.7 percent to Rs 165.3.

The recovery in oil marketing companies' share prices tracked the continued softness in crude. Brent crude settled 1.4 percent lower on Tuesday at USD 62.48 per barrel, hitting its lowest intraday level since October 22. WTI also fell 1.5 percent to USD 57.95. The drop followed signals that an intense diplomatic push by the U.S. to end Russia’s war in Ukraine might be yielding progress, alongside expectations of an emerging supply glut.

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On Wednesday morning, crude saw only mild, technical gains. Brent edged up 27 cents, or 0.43 percent, to USD 62.75, while WTI rose 24 cents, or 0.41 percent, to USD 58.19. Analysts told Reuters that these upticks appeared fragile. Priyanka Sachdeva of Phillip Nova said the rebound “feels more like a technical breather”, with any short-term spikes likely driven by softer inventory signals and short-covering.

For OMCs, crude staying below USD 63 a barrel offers immediate relief. Softer input costs help stabilise fuel marketing margins, which had slipped into negative territory over the past month even as refining margins rose -- one of the key concerns highlighted in Investec’s downgrade on Tuesday. The brokerage had cautioned that OMC profitability is significantly more sensitive to marketing margins than refining margins, and said the market was overlooking the risk posed by elevated diesel cracks.

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