Oil Shares Continue To Slide As Crude Markets Reel Under Pressure
Oil company shares were trading in negative on Wednesday
Shares of oil and gas companies faced sell-off on Wednesday, the second consecutive trading session after crude futures plunged into historic negative territory in the US. At 12:45 pm on Wednesday, the BSE Oil & Gas sub-index was trading at 10,972.80, a marginal rise of 0.34 per cent from the previous close. The positive uptick was largely led by the Reliance Industries Limited (RIL) stock, which gained more than 8 per cent, thanks to Facebook's investment into its telecom arm, Jio.
Domestic crude oil companies Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL) were down more than 7 per cent and 5 per cent, respectively, in afternoon trade. Oil manufacturing companies such as Hindustan Petroleum, Bharat Petroleum and Indian Oil, and others including Castrol India and Indraprastha Gas lost in the range of 1-3 per cent each. GAIL and Petronet, however, were in the green.
US crude oil futures turned negative for the first time ever on Monday as the coronavirus pandemic and resultant lockdowns paralysed the world economy and caused fears about swift return to growth. May crude oil price futures settled at minus $37.63 a barrel on Monday, a 306 per cent daily drop, driven by the rapid filling of the main US storage hub at Cushing, Oklahoma - the delivery point for West Texas crude.
Meanwhile, after some recovery on Tuesday, global oil prices slumped again on Wednesday, with Brent falling to the lowest since 1999, as the market struggled with a massive crude glut amid a collapse in demand for everything from gasoline to jet fuel caused by the coronavirus outbreak.
Brent crude, which fell 24 per cent in the previous session, touched $15.98 a barrel, its lowest since June 1999. It was trading down $2.70, or 14 per cent, at $16.63 at 10 am.
West Texas Intermediate was down 68 cents, or 6 per cent, at $10.89 a barrel.