Shares of three oil exploration and production companies rose by 1.12% to 1.84% and shares of three public sector oil marketing companies dropped 0.7% to 1.2% at 12:20 IST on BSE as crude oil prices gained.
Meanwhile, the S&P BSE Sensex was up 160.92 points or 0.62% at 26,042.09.
Among shares of public sector oil marketing companies (PSU OMCs), HPCL (down 1.2%) and Indian Oil Corporation (IOCL) (down 0.81%) declined.
BPCL fell 0.7% ahead of its Q4 results today, 26 May 2016.
Rise in crude oil prices could increase under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at government controlled prices. The government has already decontrolled pricing of petrol and diesel.
Among shares of oil exploration and production (E&P), Cairn India (up 1.84%), Oil India (up 1.39%) and ONGC (up 1.12%) rose.
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Index heavyweight Reliance Industries (RIL) was down 0.07% at Rs 948.55. The stock hit a high of Rs 953 and a low of Rs 944.25 so far during the day.
Higher crude oil prices will result in higher realization from crude sales for oil exploration firms.
Meanwhile, the Ministry of Petroleum and Natural Gas yesterday, 25 May 2016, announced the commencement of the process for auction of small oil and gas blocks. The government will auction 46 contract areas consisting of 67 different small fields for exploration and production. These small blocks have 625 million barrels of oil and oil equivalent gas (O+OEG) in-place volumes spread over 1,500 square kilometers in Onland, Shallow water and Deepwater areas. These oil and gas blocks are being auctioned under the new Hydrocarbon Exploration and Licensing Policy (HELP) and a new fiscal model based on revenue sharing contract. Single license for exploring all forms of hydrocarbons, graded system of royalty rates, pricing and marketing freedom for crude oil and natural gas are some of the highlights of HELP.
In the global commodities markets, Brent crude oil futures edged higher boosted after US government figures showed a sharper-than-expected drawdown in crude stocks last week. Brent for July settlement was up 36 cents at $50.10 a barrel. The contract had risen $1.13 a barrel or 2.32% to settle at $49.74 a barrel during the previous trading session.
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