ONGC, Oil India shares rise after OPEC+ surprise action lifts crude oil rates

Most energy stocks were in demand during Monday’s session. Shares of upstream firms such as Oil and Natural Gas Corporation (ONGC), Oil India Limited (OIL), Mangalore Refinery & Petrochemicals (MRPL) and Chennai Petroleum Corporation gained as much as 6.5 per cent on the BSE intraday after the OPEC+, Saudi Arabia announced a surprise oil output cut on Sunday.

Individually, Oil India shares gained the most by around 6.5 per cent, followed by Chennai Petro up 5.5 per cent, while ONGC stock, which was among the top Nifty gainers, surged around 4.5 per cent and MRPL was up more than 3 per cent intraday on the BSE.

Amid volatility in the markets, these energy stocks were trading between 2-5 per cent at around 1:45 PM on April 3, 2023.

Saudi Arabia and other OPEC+ oil producers on Sunday announced further oil output cuts of around 1.16 million barrels per day, in a surprise move that analysts said would cause an immediate rise in prices and the United States called inadvisable, according to a Reuters report.

The pledges bring the total volume of cuts by OPEC+, which groups the Organization of the Petroleum Exporting Countries (OPEC) with Russia and other allies, to 3.66 million bpd according to Reuters calculations, equal to 3.7 per cent of global demand.

On the back of output cut news, international crude oil prices jumped more than 5 per cent.

Brent crude was trading at $84.5 a barrel by 01:45 PM IST, up $4.5, or 5 per cent, after touching the highest in a month at $86.44 earlier in the session.

Similarly, US West Texas Intermediate crude was at $80.05 a barrel, also up about $4, or 5 per cent, after earlier hitting the highest level since late January.

Earlier in the day, Zee Business senior research analyst Kushal Gupta had recommended to buy ONGC and Oil India shares in futures and spot market for today. Both oil exploration and production companies’ shares breached the Zee Business target set in the Traders’ Dairy today.

On the contrary, HSBC double downgraded ONGC shares to ‘hold’ from ‘buy’ with a revised target price of Rs 165 per share from Rs 185 apiece earlier.

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