InvestorQ : Why has oil suddenly rallied in the global market? Will that be positive or negative for Indian stocks like ONGC and Reliance Industries?
diksha shah made post

Why has oil suddenly rallied in the global market? Will that be positive or negative for Indian stocks like ONGC and Reliance Industries?

Answer
image
2 weeks ago
Follow

You are absolutely correct that the price of Brent Crude oil has rallied over 10% in the last few days to cross the $45/bbl mark. It had recently dipped to below $40 on global slowdown concerns, but few things appear to have changed for the better in recent days.

The immediate trigger has been the hopes of vaccine discovery based on the signals emanating from Pfizer and its partner Biontech. There are expectations that US stockpiles may reduce while OPEC and Russia would work to keep global oil supply in check.

In addition, it must be remembered that Joe Biden is against rampant fracking, something Trump had supported to boost the American economy. With limits on fracking, US supply could get hit and that has also been giving a boost to prices.

While oil prices have moved up in the recent past, there are downside risks like the surge of COVID cases in Europe and the return of Libyan supplies to the global oil market. Many oil optimists are projecting $60/bbl by mid 2021, but that would depend on global GDP growth.

2 Views