Cairn India rallies over 4% as crude oil prices surge

MUMBAI: Cairn India, India’s largest private crude oil producer, surged over 4 per cent in trade following a sharp rise in global crude oil prices.

Brent crude oil prices have surged nearly 19 per cent to close to $58 per barrel after remaining below $50 for quite some time. According to analysts, crude oil prices have hit a bottom after 7-month rout.

Oil majors such as BP and Chevron have announced cuts in capital expenditure due to lower oil prices.

“The rally began on Friday, when oil services firm Baker Hughes said the number of US oil drilling rigs had its biggest weekly decline in nearly 30 years,” said Reuters report.

However, there are doubts whether the rally will sustain as there is oversupply of oil and demand still remains weak globally.

Crude oil prices have crashed 60 per cent since January 2014 after the production of shale gas spiked up in the US. The OPEC maintained its output leading to oil glut in the market.

Cairn India is directly impacted by any movement in global crude oil prices. It reported 53 per cent decline in net profit for quarter ended December to Rs 1,350 crore against a net profit of Rs 2884 in the corresponding quarter last fiscal.

At 11:00 a.m.; the stock was at Rs 255.10, up 4.10 per cent, on the BSE. It gained 4.34 per cent to touch intraday high of Rs 255.10.