BPCL, Shalimar Paints, InterGlobe, Apollo Tyres gain 1-4% after oil falls below $60/bbl
Fuel retailers, tyre, paint and aviation companies’ shares rallied 1-4 percent on Monday after oil prices fell sharply on last Friday and broke the $60 a barrel levels.
BPCL, Chennai Petroleum, HPCL, IOC, Asian Paints, Kansai Nerolac, Shalimar Paints, Apollo Tyres, InterGlobe Aviation, SpiceJet and Jet Airways were gainers.
Oil forms major part of the operational expenses, infact for some companies it is the raw material. Hence, any ups and downs in oil prices is always have direct impact on their margin.
On Friday, Brent crude futures, the international benchmark for oil prices, fell below $60 a barrel for the first time since October 2017 on continued concerns about a rising global surplus, even as producers considered cutting output to curb supply.
It had closed at $58.80 per barrel, falling more than 6 percent from Thursday’s close. It corrected more than 30 percent after rising over 40 percent to hit $86.29 a barrel (on October 3, 2018), the highest level since November 2014.
Oil supply, led by US producers, is growing more quickly than demand and to prevent a build-up of unused fuel such as the one that emerged in 2015, the Organization of the Petroleum Exporting Countries is expected to start trimming output after a meeting on December 6.
But this has done little so far to prop up prices, which have dropped more than 20 percent so far in November, in a seven-week streak of losses.
Today, oil prices rebounded after those hefty losses on Friday, but remained under pressure with Brent crude below $60 per barrel amid weak fundamentals and struggling financial markets.
Front-month Brent crude oil futures were at $59.55 per barrel, up 1.28 percent, from their last close.