It has been a choppy week for oil prices that surged past the $70 a barrel mark after the largest-ever disruption of crude production in Saudi Arabia amid drone attacks on its key facilities. However, prices cooled-off after Saudi Arabia's energy minister said the Kingdom will be able to restore lost oil production by September-end.
If this truly is a temporary, one-off disruption, then oil prices could stabilise near current levels, believe analysts at Nomura. On the other hand, if there is strong retaliation or more drone attacks, the situation could spiral out of control and in the worst case, this could escalate into a full-blown crisis and lead to larger and more permanent oil supply declines, they suggest.
Here's how the stocks of leading refiners and oil marketing companies (OMCs) look on the technical charts:
S&P BSE OIL & GAS INDEX:
The daily chart shows a formation of “Inverse Head and Shoulder” pattern with a breakout. Once the index is able to take out 13,550 – 13,600 levels, it can move even further to 13,900 and then 14,100 mark. The breakout seems promising as Relative Strength Index (RSI), which is at 50, trades below the overbought zone. Moving Average Convergence Divergence (MACD) is also above zero line, indicating a possible upside. CLICK TO VIEW CHART
Reliance Industries (RELIANCE):
The counter took support of 100-weekly moving average (WMA) at Rs 1,087 levels in August, it failed to give a breakout above Rs 1,300 decisively. One should not be overly positive on the stock for now. RSI also trades in a negative crossover. CLICK TO VIEW CHART
Oil & Natural Gas Corporation Ltd (ONGC):
The 50-day moving average (DMA) located at Rs 132.60 has become the hurdle for this rising stock. It did give a “Double-Bottom” breakout supported by rising RSI and MACD, which is moving towards the zero line, as per daily chart. Volumes are likely to get thin as the counter moves towards the 50-DMA. On the downside, a closing basis support stays at Rs 125 level. Going ahead, if ONGC is able to cross Rs 132.60, the stock can move up to 145 and then Rs 148, which are its respective 200-DMA and 100-DMA levels. CLICK TO VIEW CHART
Hindustan Petroleum Corporation Ltd (HINDPETRO):
The counter is trading above 200-weekly moving average (WMA), which is currently placed at Rs 230.50. This level did break in October 2018, but failed to do so convincingly. The stock has doubled from its October 2018 low of Rs 155 to hit a 52-week high of Rs 323.30. That said, it is now struggling to cross its 100- DMA at Rs 275. A range of Rs 230 – Rs 270 remains crucial for a further leg-up. CLICK TO VIEW CHART
Indian Oil Corporation Ltd (IOC):
The 50, 100 and 200-day moving averages (DMA) are indicating a negative sentiment. A 'double-bottom' formation supported by the Relative Strength Index (RSI), which is moving up with higher lows after moving out of oversold region, and Moving Average Convergence Divergence (MACD), which is heading towards zero line upward are signs of a possible recovery. A move above Rs 131 may see the counter hit Rs 140 and then 148 in the near-term. There is support at Rs 120. CLICK TO VIEW CHART
Bharat Petroleum Corporation Ltd (BPCL):
In the last 16 sessions, the counter has outperformed the frontline indices with a gain of 25 per cent. Such a significant rally in a short period may be met with profit booking. The RSI, too, has entered the overbought region. That said, the overall trend remains bullish and a rally towards Rs 440 may be expected over the medium term. The range of Rs 370 – Rs 365 remains a firm support for the stock. CLICK TO VIEW CHART