Shares of oil marketing companies were reeling under selling pressure on Wednesday, in line with the broader market, as international crude prices slide over 3% amid recession fear and weak demand outlook. The U.S. government’s push to cut fuel costs also triggered a sell-off in the crude market. The Brent crude oil for August delivery dropped nearly 4% to $110 per barrel, while it has retreated 6% from its all-time high of $125.1 a barrel touched on June 14, 2022.
The S&P BSE oil and gas index declined as much as 2.9% to hit an intraday low of 17,084 levels on the BSE, led by the index heavyweight Oil and Natural Gas Corporation (ONGC), which fell nearly 6% during the session so far. Reliance Industries, the country’s most valued firm, dropped 3%, Adani Total Gas tumbled over 4%, and Oil India skid over 2%.
Bucking the trend, Mangalore Refinery & Petrochemicals (MRPL) rose over 4%, followed by HPCL, BPCL, IGL, and Petronet LNG which gained up to 3%.
At the time of reporting, the Brent crude oil for August delivery was down 3.89% to $110.2 per barrel, while the U.S. West Texas Intermediate (WTI) crude August futures plunged 4.5% to $104.6 a barrel. The oil prices tumbled amid growing concerns that the global economy may slip into recession in the wake of recent rate hikes, while the weak demand outlook for the commodity also dented sentiments. The prices also fell after U.S. President Joe Biden pushed to cut fuel prices to tame the energy inflation and ease pressure on major U.S. firms during the country's peak summer demand.
As per media report, U.S. President Joe Biden is set to temporarily suspend a federal tax on gasoline to bring down boiling fuel prices and ease inflationary pressure on the economy. Adding to it, a slew of oil companies are set to meet Biden on Thursday to curb rising fuel prices, which surged due to supply-chain disruption caused by the Russia-Ukraine war.
Brent crude, the international benchmark, hit an all-time high of $125.1 a barrel on June 14, 2022, after the European Union imposed a partial ban on Russian oil imports in wake of Moscow’s invasion of Russia. The geopolitical tensions and demand-supply imbalance have pushed oil prices to record high in the recent past. In a fresh development, European Union leaders plan to maintain pressure on Russia at their summit this week by committing to further work on sanctions, according to ICICI Direct.