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ICICI Securities Report
Recent bearishness in global oil and gas prices creates a positive margin scenario for Indian oil and gas companies. Crude oil prices have declined in the last few weeks, with:
global economic worries and
doubts of OPEC+ managing to continue its production cuts driving the bearishness.
The subdued sentiment is offsetting data on the ground with demand growth expected at ~0.8–1mb/d for CY24, OECD oil + product inventories below historical averages, US SPR rebuild starting to ramp up and continued uncertainties on Russia-Ukraine/ME conflicts.
Our core thesis remains around a slightly tighter market for oil vs. current trends and a seasonal spike in LNG price, but we note that margin benefits for Indian players (oil marketing companies/city gas distributions) will likely be substantial, if the current softness sustains, even for the next six months.
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