Among individual stocks, Oil India surged 6.2 per cent to Rs 267.45, while, ONGC rallied 4 per cent to Rs 157. In comparison, the S&P BSE Sensex was down 0.02 per cent at 58,979 at 09:27 am.
Brent oil futures jumped $5.16 to $85.05 a barrel, while US crude climbed $4.88 to $80.55 as reports suggested oil output would be cut by around 1.16 million barrels per day.
The change comes before a virtual meeting of an OPEC+ ministerial panel, which includes Saudi Arabia and Russia, wherein it was expected that the group would stick to 2 million bpd of cuts already in place until the end of 2023, news agency Reuters reported.
According to investment firm Pickering Energy Partners, the latest reductions could lift oil prices by $10 per barrel. Goldman Sachs lifted its forecast for Brent to $95 a barrel by the end of the year and to $100 for 2024, the news agency reported. CLICK HERE FOR FULL REPORT
However, upstream companies’ net oil realisation would remain unaffected due to the imposition of windfall tax, according to analysts.
“Sustained higher crude oil prices and gas realisations can result in better profitability for ONGC. Periodic revision in windfall taxes will be the key monitorable. The ramp-up in oil & gas production from KG Basin and overseas assets, value unlocking from subsidiaries and other investments along with lower holding company discount on investments and high dividend yield and payout ratio are key triggers for future price performance,” according to analysts at ICICI Securities.
Analysts at Prabhudas Lilladher, meanwhile, have a ‘buy’ rating on ONGC with a target price of Rs 190 per share. Going forward, with KG98/2 field coming on stream the brokerage firm expects ONGC’s oil and gas production to increase by 4-5 per cent. It plans to increase Columbia oil production to 30000bpd from current 18,000bpd in FY23E, analysts said in their December quarter result update.