Global crude oil prices are expected to remain strong over the medium term, HDFC Securities said.
Accordingly, the brokerage’s report indicates that the price of Brent crude, which currently stands at over $ 75 a barrel, was driven by a rebound in global demand with the opening of the economy.
“At the end of July, Hurricane Ida hit the United States, resulting in a 1.7 million barrels per day production shutdown in the Gulf of Mexico (GoM) in August. The IEA expects shipments from the Japanese government to normalize by Q4 CY22, ”the report said.
“With crude oil and petroleum product inventories in the lower half of a five-year range and the EIA estimates that global crude oil supply growth will lag behind demand growth in 2021 as the global economic recovery continues to gain momentum, we see the risk of rising crude oil prices.” …
In addition, the report notes that gas prices on the domestic market should jump sharply.
“We estimate that the domestic gas price for APMs will be revised upward by more than 60 percent to US $ 3 per million BTU in the second half of FY22, and by more than 45 percent to over US $ 4. per million BTUs in the first half of fiscal year 23, up from the current price of US $ 1.79 per million BTUs.
“The PPM gas price, which is currently at a ten-year low, should rise sharply, aided by higher global gas prices after the unblocking of economies and the current supply shortage in Europe ahead of the winter season,” the statement said.
Upstream companies will benefit from improved sales, according to the report.
“We expect that in the 23rd fiscal year ONGC (autonomous) will produce 23 million tons of oil and 24.8 billion cubic meters of gas, and OIL – 3.2 million tons of oil and 2.6 billion cubic meters of gas.”
“Higher gas prices and higher Brent crude prices should improve sales and, in turn, lead to a 30-54% CAGR compared to FY21-23 for ONGC and OIL. ONGC should also benefit from an increase in gas production by 12 million cubic meters. M per day for 21 financial years. 25E as production from KG pool units ”.
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