Brent Crude Rising: Crude oil is steadily increasing this year. Since January 1, Brent crude has become expensive by about 30 percent. As of 11 am on February 25, the price of Brent crude remains above $ 67 per barrel. Talking about the last 1 year, it has become 24 percent costlier. On January 1, crude oil was around $ 50 per barrel, which has now risen to $ 67. Experts are assuming that this rise of crude oil will continue even further. Many agencies and experts are expecting crude to reach $ 70 by next month. At present, the rise of crude oil can put pressure on the shares of many companies, which use it in raw materials.
Brent $ 70 a barrel by the end of FY21!
Anuj Gupta, deputy vice-president, commodity and currency, Angel Broking, says the major reason behind the rise in crude oil is that with the opening of the lockdown, work on the economy is gaining momentum in most countries worldwide. Due to this, the demand for crude oil has increased. Recovery in the tourism industry and aviation industry is also supporting crude prices. On the other hand, OPEC countries are under production control, so that their profits increase. Crude can become more expensive if global economic recovery is faster. It is estimated that Brent can touch $ 70 and WTI crude by $ 67 by March.
Shares of these companies rose sharply in crude
Ajay Kedia, director of Kedia Advisory, says that upstream companies are increasingly benefiting from crude. As the crude is growing, the refining companies can increase their brightness. As seen this year. This will benefit stocks like ONGC, Oil India and GAIL. Talking about this year from January 1, ONGC shares have risen from Rs 93 to close to Rs 120. At the same time, the share of GAIL has gone from Rs 123 to Rs 150. At the same time, the share of Oil India has also gone from Rs 108 to Rs 128 during this period.
He says that the rise in crude causes a loss to companies using crude as raw material besides OMCs. This includes paint, plastic, fertilizer and shipping companies.
Which shares can increase pressure
The companies which suffer losses due to the rise in crude, include OMC, aviation companies, paint companies, rubber and tire companies, as well as FMCG companies. ATF prices rise due to higher price of crude. 25-30 per cent of the cost of tire companies comes from petrochemical products, so the industry will suffer losses due to increase in crude as expensive raw materials. Rubber and nylon tire cord prices also increase.
Companies dependent on plastics like Syntex Industries, Neelkamal and Supreme Industries may also suffer loss of expensive crude. Pressure can also increase on stocks like DCW, Philips Carbon, Goa Carbon and Nosil.
Paint companies also have 25 to 30 percent of their raw material coming from petroleum products. Therefore, pressure can also be seen on their margins. It has companies like Asian Paint, Kansai Nerolac. Petroleum products account for a significant portion of the cost of FMCG products. It is also used in packaging. FMCG companies like HUL, Godrej Consumer and Dabur can also see its impact.