Asian Paints, SpiceJet, HPCL, CEAT Ltd: Oil-related stocks rally as Brent Crude plunges 6.5% in 4 sessions

The price of Brent crude has plunged 6.5% in the previous four sessions, dropping to its lowest since December 2021 on Wednesday, while WTI fell 5.8% over the same period to its lowest since May 2023.

How stocks are faring

Among individual stocks, Asian Paints was trading over 2.5% higher at ₹2,220 apiece on the BSE, while Indigo Paints was up 2% at ₹1,039.25 on the BSE.

Berger Paints was up 2.38% at ₹495.70 on the BSE.

In aviation space, InterGlobe Aviation was trading flat with a positive bias while SpiceJet shares were trading over 2.6% higher.

Among tyre stocks, JK Tyre shares were trading 0.33% higher, while MRF shares were up over 1%. Balkrishna Industries shares were trading 1.76% higher, while CEAT Ltd shares were trading over 1% higher.

Shares of Hindustan Petroleum Corporation (HPCL) were trading over 3% at ₹337.10 apiece on the BSE, while Bharat Petroleum Corporation (BPCL) was up 2%.

Indian Oil Corporation shares were trading over 2% higher at ₹125.10 apiece on the BSE.

On the contrary, ONGC shares were down half a percent at ₹228, while Oil India was down 0.27%.

Oil prices fell after the US enacted tariffs on Canadian and Mexican trade, including energy imports, at the same time major producers decided to raise output quotas for the first time since 2022, according to a Reuters report.

Crude oil is one of the key raw materials for the tyre and paint companies. Crude oil derivatives make up 55–60% of the raw materials used in the production of paint. Similarly, tyre industry relies heavily on oil-derived products such as synthetic rubber. Hence, a decrease in crude oil means the production will be cheaper, thereby benefitting the profit margins of these companies.

Oil marketing companies such as BPCL, HPCL, and IOCL are also expected to rise. However, upstream companies such as ONGC and Oil India are expected to fall from the decline in oil prices as their efforts to extract oil remain the same, but margins decrease.

On Thursday, however, oil prices steadied after falling over the past four sessions as US tariffs on Canadian crude supply may be eased, but investors remain wary of remaining tariffs on Mexico and major producers' plans to increase output.

Brent is the leading global price benchmark for Atlantic basin crude oils, while West Texas Intermediate (WTI) oil is another benchmark used by oil markets, representing oil produced in the US.

It is based on oil at a large tank and pipeline hub in Cushing, Oklahoma.