Shares of most oil & gas sector players traded with losses in morning trade on BSE on April 22, keeping their sectoral index in the negative territory.
Shares of ONGC plunged over 12 percent in morning trade while those of BPCL, HPCL, Indraprastha Gas and Indian Oil Corporation cracked up to 5 percent.
Around 10:35 hours, the BSE Oil & Gas index was 1.68 percent down at 10,760, and out of a total of 10 components, only three - Reliance Industries, GSPL and Petronet LNG - were in the green around that time.
In the international market, oil prices found some respite as the US oil futures rose more than 20 percent during trade on Wednesday and Brent prices steadied after a two-day price plunge, Reuters reported.
US benchmark WTI prices traded in the negative territory for the first time on April 20 with May futures contracts for WTI oil crashing to a historic low of -US$37.6/bbl, ahead of the expiry day.
"Due to the COVID-19 outbreak, oil consumption has declined drastically, which led to storage capacities in the US to get almost full. As WTI contracts get settled physically on expiry, there was such a historic collapse in oil prices," said brokerage firm ICICI Direct.
The brokerage said considering the extremely volatile global market, it is difficult to make an assessment of the current situation.
"Upstream companies fundamentals, as well as petrochemicals business and profitability of companies like GAIL, will be negatively impacted as oversupply will continue to be an overhang on oil prices," said ICICI Direct.
As per brokerage firm SMC Global, the demand is rising slowly & steadily. In fact, the year-long hiring contracts for VLCC (very large crude carriers) that can store up to 2 million barrels of oil are soaring through the roof. According to a report in the Wall Street Journal, VLCC hiring charges for year-long contracts are now at $72,500 a day, compared to $30,500 a day a year ago. This shows a rising demand for such floating storage to take advantage of low prices now.
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