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Oil prices likely to remain range bound at $55-65 per barrel: Ind-Ra

29 Jan 2019 Evaluate

Amid various factors like rise in supply from the US, debt crisis in Venezuela and the limited clarity on the sanctions on Iran, credit rating agency, India Ratings and Research (Ind-Ra) is expecting oil prices to remain range bound at $55-65 per barrel.

As per the report, the range-bound crude price would limit large inventory gains or losses. The rating agency also expects the bulk of the subsidy to be borne by the government as against FY19, when the government, for a brief period, asked oil marketing companies to absorb marketing operations-related losses.

Further, Ind-Ra maintained a stable outlook for the oil and gas sector for FY20, on account of continued strong domestic petroleum product demand, healthy gross refining margins, petrochemical expansion by refiners to improve downstream value addition and rise in the usage of natural gas.

However, the rating agency feels that the credit profiles of public oil and gas undertakings continue to depend on government policies on subsidy sharing, shareholder payouts, and large capex for refinery upgrade and expansion into new growth areas like upstream and city gas and LNG distribution).

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