The share price of ONGC moved up today on the back of firm global crude oil prices. The stock of the oil exploration major settled with a slight gain of 0.5 per cent at Rs 370.20 on the BSE, marginally off from the day's high of Rs 372.80. The counter logged a turnover of 56,422 shares.
The stock has been moving in a range of Rs 325 to Rs 370 during the last few months. Earlier, from a low of Rs 138.05 on January 25, 2002, the share surged 184.4 per cent within four months to a high of Rs 392.65 on May 16, 2002.
Analysts said ONGC serves as a hedge against a rise in crude oil prices. Global crude oil prices have firmed up in recent weeks amid growing possibility of US military action against Iraq, which has the world's second-largest reserves of oil.
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Brent Crude futures for October 2002 delivery rose 40 cents to $27.50 a barrel on London's International Petroleum Exchange today, after light crude oil futures rose 48 cents to $28.27 a barrel in the US on Wednesday.
US President George W Bush said yesterday that he would ask Congress at an appropriate time to support any action on Iraq. Bush also said that he would make his case against the Iraqi leader in an address to the UN General Assembly on 12 September, the day after the one-year anniversary of the worst terrorist attack against America.
Recently, there have been reports that ONGC has signed agreements with local refining companies to sell crude oil at international prices. ONGC and the refiners will share customs and sales-tax levies.
Despite the dismantling of the administered pricing mechanism (APM), ONGC was selling crude at a provisional price till recently, which was below the international prices. Crude oil, in fact, was being sold at a price of $22 per barrel.
For the first-quarter ended July 30, 2002, ONGC reported a sharp surge in net profit following increased production and higher price realisations, consequent to the dismantling of APM. The company posted a 34 per cent increase in net profit at Rs 1,980.8 crore on a 27 per cent growth in top line at Rs 7056.22 crore.