OMCs lose as rupee falls

Oil marketing companies (OMCs) are the top three losers on the BSE. The top loser is HPCl, down 7% at Rs.887.25, BPCL is number two – down 6% at Rs.871.05 and third top loser is IOC, down 6% at Rs.393.90.

The worry is obviously because of crude oil hitting new lows. Yesterday, post yuan devaluation, the US benchmark West Texas Intermediate (WTI) for September delivery fell five cents to $43.03 while Brent crude for September slipped 35 cents to $48.83 in late-morning trade. This fall of WTI was the lowest level since March 2009. 

There is now worry that crude could fall into the $30/barrel and OPEC said that it was pumping more oil. It in fact upped its forecast of oil supply from nonmember countries in 2015. Production has increased by about 6,00,000 barrels a day in the US this year, holding stable at around 9.4 million/barrels for some months now.

Ideally, OMCs, which are beneficiaries of lower crude oil should rejoice and should figured in the top gainers list but it is amongst the losers today as the growing perception is that fast depreciating rupee could offset all gains made by falling crude prices as imports will get costlier.