ONGC, Oil India shares surge 4% as crude oil prices hits over 2-month high

ONGC share price: Brent crude futures were trading above $76 per barrel-mark, while WTI Crude was around $73.4 per barrel. Both of them were higher by up to 0.36 per cent today

Shares of Oil and Natural Gas Corporation (ONGC) (Rs 255.20) and Oil India (Rs 483.90) gained 4 per cent on the BSE in Friday's intraday trade, amid heavy volumes, in an otherwise weak market after Brent crude oil price hit an over two-month high.

 

The rise in oil price came amid hopes of improvement in China's economic growth prospects. Xi's New Year address on Tuesday said that China would implement more proactive policies to promote growth in 2025.

 

Oil prices extended their gains on Friday, after closing at their highest in more than two months in the previous session, on hopes that governments across the world, too, may increase policy support to revive economic growth that would lift fuel demand, Reuters reported.   Brent crude futures were trading above $76 per barrel-mark, while WTI Crude was around $73.4 per barrel. Both of them were higher by 0.3 per cent and 0.36 per cent, respectively, today.

 

 

In comparison, the BSE Sensex was down 0.63 per cent at 79,437 at 09:59 AM. ONGC share price (down 26 per cent) and Oil India share price (down 38 per cent) have corrected over 25 per cent from their respective record highs touched in August 2024.

 

That said, India Ratings and Research (Ind-Ra) has maintained a 'neutral' outlook on the oil and gas sector for financial year 2025-26 (FY26). The agency expects the credit profile of upstream oil companies to remain dependent on crude oil prices.

 

Earnings before interest, taxes, depreciation, and amortisation (Ebitda) generation for upstream companies may fall with a moderation in oil prices and a reduction in production from legacy fields. However, the impact of low crude oil price is expected to be offset by the removal of special excise on the production of crude and an increase in production expected from new discoveries, it added.

 

The agency, however, said upstream companies will continue to earn healthy margins, despite the current decline in crude oil prices, as price remains above $65 per barrel.  

 

"This would keep sufficient cushion in margin, with an estimated break-even cost of production at $40-45 a barrel, leaving Ebitda of $20-30 per barrel. Oil prices averaged $78.7 per barrel during Q2FY25 and declined to $75.2 during October 2024 and $73.02 in November 2024,"it pointed out.

 

Crude prices will remain dependent on global geopolitical developments, including demand pickup and production targets announced by the Opec+, it said.