OMCs, aviation, paint stocks drop as crude oil prices rise post OPEC+ deal

The S&P BSE Oil & Gas index slipped nearly 3 per cent in the early trade on Monday after OPEC and allies led by Russia agreed on Sunday to a record cut in output to prop up oil prices. The deal, which comes amid the coronavirus pandemic, could curb global oil supply by 20 per cent. READ MORE

Reacting to the development, crude oil prices were trading firm at the time of writing of this report. While US West Texas Intermediate (WTI) crude futures were up 4.8 per cent at $23.87 per barrel, international benchmark Brent futures rose 4.19 per cent to $32.80 per barrel, Bloomberg data showed. 

At 09:43 am, the index was trading over 2 per cent lower at 10,798.53 levels, down 2.61 per cent. Among individual stocks, ONGC was quoting 4.8 per cent lower at Rs 73.60 apice on the BSE. Castrol India traded 3.67 per cent lower at Rs 111.55 and GAIL was down around 3.3 per cent at Rs 84.90. Indian Oil Corporation (IOC) was down 1.5 per cent at Rs 82 while BPCL was down over half a per cent at Rs 343. 

Reliance Industries (RIL) was trading over 3 per cent lower at Rs 1,182 apiece. 

Among paint stocks, Asian Paints was down over 2.6 per cent to Rs 1,609 while Berger Paints was trading nearly 0.8 per cent lower at Rs 470.95. Kansai Nerolac slipped nearly 5 per cent to Rs 360.50 apiece. Oil is one of the key raw materials in paint manufacturing.

Aviation stocks, too, were trading in the red. While SpiceJet was down around 5 per cent at Rs 44.60, InterGlobe Aviation fell around 4 per cent to Rs 998.85. 

That apart, tyre stocks were also trading in the negative zone. For instance, JK Tyres was down over 4 per cent at Rs 43.60, Apollo Tyres was down 2 per cent at Rs 88. MRF was also trading over 2 per cent lower at Rs 58,794 apiece on the BSE. 

Measures to slow the spread of the coronavirus have destroyed demand for fuel and driven down oil prices, straining budgets of oil producers and hammering the US shale industry, which is more vulnerable to low prices due to its higher costs, Reuters reported. 

The group, known as OPEC+, said it had agreed to reduce output by 9.7 million barrels per day (bpd) for May and June. 

"OPEC+ sources said they expected total global oil cuts to amount to more than 20 million bpd, or 20 per cent of global supply, effective May 1. OPEC had the same figure in its draft statement but removed it from the final version," the report added.