Why is ONGC's stock rising today?

31 May 2022 , 01:23 PM

ONGC’s stock is among the top gainers today.  By 1 p.m. today the stock has gained 3.99% over its previous closing price. This rise has happened because of further increase in crude oil prices. ONGC is an explorer and producer of oil. So it benefits from increase in oil prices. Its case is different from oil marketing companies such as Indian Oil. Oil marketing companies are hurt when oil prices go up.

Crude oil futures price for July delivery has risen to $122 per barrel.  Rise in futures price means that further rise in the price of crude oil is expected. Spot price of crude oil is currently $115 per barrel. These prices are for Brent crude oil. West Texas Intermediate crude oil has spot price of around $110 per barrel currently.  One barrel is made up 42 gallons of oil. 1 gallon has 3.7 liters.

It needs to be mentioned here that news came yesterday that India’s crude oil production has fallen to its lowest level in 28 years. The country’s oil production stood at 28.4 million tons in 2021-22. A major part of the country’s crude oil output comes from ONGC.