Shares of some petroleum refining companies were in huge demand on Tuesday as they hit the upper circuit on rising crude oil prices as signs emerged that oil production may not increase much.
Mangalore Refinery & Petrochemicals (MRPL) leapt 10 per cent to Rs 90.35 while Chennai Petroleum Corporation spiked a similar amount to Rs 328.15. Oil India, which runs Numaligarh Refinery, was up 4 per cent.
BPCL, Hindustan Petroleum and Indian Oil were flat. Reliance Industries rose about a per cent.
Oil refining companies, especially those that export refined products, gain from higher crude oil prices as they improve margins. Understandably, some of these stocks have delivered healthy returns in the current calendar year.
Earlier, crude oil prices rose about 1 per cent in early Asian trade on Tuesday after the United Arab Emirates' energy minister said the nation is producing near capacity, countering expectations that it could help boost supply in a tight market.
The UAE and Saudi Arabia have been seen as the only two countries in the Organization of the Petroleum Exporting Countries (OPEC) with spare capacity available to make up for lost Russian supply and weak output from other member nations.
US West Texas Intermediate (WTI) crude futures climbed $1.07, or 1 per cent, to $110.64 a barrel at 0028 GMT, extending a 1.8 per cent gain in the previous session. Brent crude futures jumped $1.08, or 0.9 per cent, to $116.17 a barrel, adding to a 1.7 per cent rise in the previous session.
If there is no capacity addition, crunch for the western world which has boycotted oil from Russia will worsen and crude oil will likely trade high in coming weeks.
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