ONGC, Oil India gain up to 3% as oil prices rule at highest since 2015

STOCK MARKET - Shares of state-owned oil exploration & production companies – Oil and Natural Gas Corporation (ONGC) and Oil India – rallied up to 3.5% on the BSE in early morning trade on rising crude oil prices.

“Oil prices rose 3% on Monday, hitting the highest since early July 2015, as Saudi Arabia's crown prince cemented his power over the weekend with an anti-corruption crackdown, while the US rig count fell and markets continued to tighten,” the Reuters report suggests.

Oil India hit a 52-week high of Rs 382, up 3% on the BSE in intra-day trade, while ONGC rallied 3.5% to Rs 205.50 extending its 16% surge of the last one-month on the BSE. The stock is trading close to its 52-week high of Rs 212 touched on January 31, 2017 in intra-day trade.

Selan Exploration Technology (up 5% at Rs 259), Aban Offshore (up 3.5% at Rs 227), Jindal Drilling & Industries (4% at Rs 174) and Hindustan Oil Exploration (up 3% at Rs 110) from the private sector, trading higher in the range of 3% to 5%, as compared to 0.31% rise in the benchmark S&P BSE Sensex at 09:41 AM.

Higher crude prices will result in higher realisation for these oil exploration companies and result in increased profitability for them.

Analysts at Spark Capital remain positive on ONGC mainly led by their view of crude prices of $56/$60/bbl for FY18/19E - stock currently factoring in around $50/bbl crude price.