Shares of oil marketing companies rose up to 6 percent on Thursday after crude oil prices shed more than 1 percent on Wednesday, logging a second straight day of losses as US crude stockpiles unexpectedly rose. The sentiment was also lifted after Saudi Arabia maintained a faster-than-expected recovery of its oil production.

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US President Donald Trump saying a resolution to the China-US trade rift would come sooner than expected also helped stave off worries about global growth, supporting the decline in oil prices.

In intra-day deals, HPCL and IOC rose as much as 6.2 percent to Rs 303.40 and Rs 149.40 per share, respectively. BPCL added as much as 2.7 percent to Rs 477.30 per share.

These stocks lifted the BSE Oil and Gas, and Nifty Energy index 1.8 percent and 1.5 percent, respectively. In comparison, the BSE Sensex and Nifty rose over 1.2 percent each.

Global brokerage Morgan Stanley is also bullish on OMCs. It said that OMCs remain steadfast in maintaining margin despite crude price rise post the drone attack in Saudi. Even digital payment-related discounts have been removed recently, it added.

With the government looking to divest assets and fuel regulations, the margin may remain high, the report noted. Top pick for the brokerage is HPCL amongst oil marketing companies.

Goldman Sachs also upgraded HPCL, IOC to 'buy' and has 'neutral' call on BPCL. The brokerage sees higher refining margin and range-bound crude prices in the medium-term.

The US crude inventories unexpectedly rose 2.4 million barrels last week, the Energy Information Administration said, instead of declining 249,000 barrels as analysts forecast.

“The market was under pressure from the Saudis returning to full production much sooner than the market thought plus the bearish inventory stats,” Andy Lipow, president of Lipow Oil Associates in Houston told Reuters.

Sources told Reuters that Saudi Arabia restored production capacity to 11.3 million barrels per day, a quicker recovery than expected after the September 14 attacks that halved more than half the kingdom’s output.

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First Published:Sept 26, 2019 11:49 AM IST