MUMBAI (Reuters) - Shares in India’s top three oil marketing companies surged on Wednesday, as investors cheered the slump in global crude oil prices that bode well for the profitability of Indian refiners.
India’s biggest state-owned refiner Indian Oil Corp was up 7.81 percent on the National Stock Exchange, while Bharat Petroleum Corp and Hindustan Petroleum Corp rose 7.44 percent and 8.57 percent, respectively.
International benchmark Brent crude oil futures struggle to claw back after plunging 7 percent on Tuesday, over concerns of a potential supply glut in 2019.
The sharp drop came after the U.S. Department of Energy’s Energy Information Administration (EIA) said late Tuesday that crude oil output from seven major shale basins in the country was expected to hit a record of 7.94 million barrels per day (bpd) in December.
This coincided with a monthly report from the Organisation of Petroleum Exporting Countries (OPEC) that the market would see a lower demand than expected in 2019.
A low crude oil price is a boost to India’s state-owned oil marketing companies and the economy in general which imports 80 percent of its crude oil requirement.
The three public sector companies were forced to take a price cut last month hurting their margins as the government wanted to cushion the impact of high crude oil price on the public.
Shares in Indian airline companies InterGlobe Aviation Ltd, Jet Airways Ltd and SpiceJet Ltd also rallied on Wednesday, as the surge in oil prices earlier this year had pushed them into losses.
Reporting by Promit Mukherjee, Editing by Sherry Jacob-Phillips