Oil stocks rallied on Friday on the back of higher crude prices, supported by the optimism on the COVID-19 vaccine rollout.
The top gainer in the oil space, aa well on the Nifty50 index, was ONGC, up as much as 13 percent. The stock gained to Rs 104.40 per share on the NSE. At 11:30 am, the stock traded 7.5 percent higher at Rs 98.60.
GAIL gained as much as 7.5 percent to Rs 128.80 while Indian Oil Corporation rose 4.34 percent higher to Rs 95.55. All these stocks remained among the top gainers on the Nifty50 index.
This is the first time since March this year that Brent crude rose above $50 as more countries made progress towards rolling out a Covid-19 vaccine. The bullish sentiment offset a large increase in US inventories that showed there was still ample supply available.
Currently, the February contract of Brent crude on the Intercontinental Exchange is trading at $50.29, higher by 2.93 percent from its previous close.
“Now that we’ve already started the deployment of vaccines in some part of the world, there is optimism about the normalization of the global economy and therefore higher oil prices,” said Bart Melek, the head of global commodity strategy at TD Securities.
The surge in Brent crude also comes a day after the Energy Information Administration reported an increase in crude inventory levels in the US. According to the EIA data, the inventory of crude oil in the US rose by 15.2 million barrels against the analysts' projection of a 1.4 million-barrel decline.
Further, the Organization of the Petroleum Exporting Countries (OPEC) and Russia have agreed to a marginal increase in oil production from January 2021 onwards. The increase in crude oil will most likely also lift the retail price of petrol and diesel in India.