Crude oil prices erase 2024 gains; paints, OMCs, and tyre stocks rally up to 5%

2 min read | Updated on September 04, 2024, 11:31 IST

SUMMARY

On Tuesday, Brent crude oil prices fell more than 5% globally to $73 per barrel as economic indicators suggested weakness in the world’s top two economies, China and the US. With the current fall, Brent crude prices have eroded all the gains in 2024 and now trading 5% below the January 2024 levels.

Crude oil prices erode entire gains in 2024; paints, OMCs, and tyre stocks rally up to 5%

Paints, oil marketing companies (OMCs), and tyre stocks saw a sharp uptick on Wednesday morning as Brent crude oil prices traded below the $74 per barrel mark for the first time in 2024. With the recent fall, Brent crude oil prices have eroded all the gains in 2024 and now trading 5% lower for 2024 at $73.7 per barrel.

Crude oil futures ended in the red on Tuesday as downbeat economic data from China and a weak reading on the US manufacturing sector . Further, the end of the summer driving season in the US added to concerns about oil demand. Besides, the prospects of a excess oil supply from OPEC and allied countries, collectively known as OPEC+, also weighed on oil prices.

Paints stocks

Shares of Asian Paints, Indigo Paints, and Kansai Nerolac were trading higher by 3% to 5% on Wednesday following a fall in crude oil prices. Crude oil is a primary raw material for the paint industry and allied products.

Tyre Stocks

The share prices of JK Tyre, Apollo Tyres, MRF, and Ceat are 1% to 2% higher in Wednesday's opening session, led by a steep fall in global crude oil prices. Crude oil derivatives constitute nearly 50% of the cost of manufacturing for tyre companies. Lower oil prices are expected to improve operating margins and profitability.

Oil marketing companies

Leading OMCs such as BPCL, Hindustan Petroleum, and Indian Oil Corporation are set to be the primary beneficiaries of the fall, as a $1 fall in Brent crude oil prices leads to a 20-30 bps improvement in margins for the oil marketing companies. The share prices of BPCL, Hindustan Petroleum, and Indian Oil Corporation were trading 2.5% higher on Wednesday morning.

About The Author

Upstox News Desk is a team of journalists who passionately cover stock markets, economy, commodities, latest business trends, and personal finance.

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Crude oil prices erase 2024 gains; paints, OMCs, and tyre stocks rally up to 5%

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