OMCs, refiners erase gains; re-thinking diesel hike

OMCs, refiners erase gains; re-thinking diesel hike

Last Updated: Fri, Sep 14, 2012 08:31 hrs
A worker switches on a fuel pump before filling a car with diesel at a fuel station in New Delhi

Reuters Market Eye - Shares in Indian oil marketing companies and refiners erase earlier sharp gains and turn negative as the spike in crude prices post-QE3 is seen offsetting the positive impact of the government's diesel price hike.

Hindustan Petroleum Corp falls 2.6 percent as of 0808 GMT after earlier rising as much as 5.5 percent.

Indian Oil Corp falls 1.3 percent after rising up to 5.3 percent, while Bharat Petroleum Corp falls 1.7 percent after rising as much as 6.2 percent.

Brent crude has risen more than $1 a barrel towards $117 after the Federal Reserve announced a new asset-purchase programme on Thursday.

Goldman Sachs says the diesel hike in India would be positive for marketing and refining companies, but it could also lead to a lower subsidy payout from the government as well as oil explorers.

Fuel subsidies in India are borne by the government, marketing and refining companies, as well as explorers.

"While the price hike is positive for oil companies, the government will be biggest beneficiary, in our view," Goldman says in a note dated on Friday.

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