market | IST

Oil on the boil: Higher crude prices bode well for ONGC, GAIL, here's why

Crude prices have been on a rise. Brent crude is now inching towards USD 75 per barrel mark. In June itself, there’s been 8 percent rise in crude. This year, there has been a gain of 45 percent. CNBC-TV18’s Sonal Bhutra explained the impact on crude sensitives.

Crude prices have been on a rise. Brent crude is now inching towards USD 75 per barrel mark. In June itself, there’s been 8 percent rise in crude. This year, there has been a gain of 45 percent.
Comparing it with the stock move, in the past one-week, Oil and Natural Gas Corporation (ONGC) and GAIL have also risen by around 32-35 percent. ONGC is up 10 percent this month, there has been gain of 2 percent coming on GAIL, and the stocks have done well in last couple of months because higher crude prices bode well for these two stocks.
For ONGC, every one dollar per barrel increase in crude prices results in EPS rising by 3-4 percent. Similar is the case for Oil India as well. ONGC and Oil India are few of the top gainers in trade on Wednesday.
Higher crude prices are a positive for liquefied petroleum gas (LPG) sales and the gas trading business for GAIL. So, increase in crude prices definitely is a positive for GAIL.
Watch the accompanying video of CNBC-TV18’s Sonal Bhutra explaining the impact on crude sensitives.