Aviation stocks take off

about 3 years ago
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Oil prices are down and out today. In the international market, they fell by almost 3%, going down to a 5-month low as concerns about global oversupply wiped out all of the price gains since OPEC's move to cut output.

The U.S. West Texas Intermediate (WTI) crude oil futures were trading at $44.14 per barrel, down $1.39 or 3%, after a more than 4% drop the previous session.

WTI futures have fallen below prices when the OPEC cuts were agreed in late November and are at their lowest since Nov. 14.

The international benchmark for oil prices, the Brent crude futures, were at $47.05 per barrel down $1.33 or 2.8% from their last close. Brent tumbled back below $50 in the previous session and is its lowest since Jan. 14.

A report in Reuters said that crude is now back to levels last seen before the Organization of the Petroleum Exporting Countries (OPEC) and other producers said they would cut output by almost 1.8 million barrels per day (bpd) during the first half of the year in a bid to tighten the market. If the price fall continues, OPEC members could be forced to cut down production once again.

This is being viewed as good news by the Indian markets for the aviation sector as its fuel prices could drop. The airline companies do not reduce the airfare prices but enjoy the advantage of the lower fuel price thus gaining on the margin front.

Aviation stocks are today in the limelight, with Spicejet hitting a new high at Rs.121.50; Jet Airways went up over 3% to an intra day high at Rs.552 and Indigo rose 4% to Rs.1151.85.

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