ONGC rallied 4.4% to Rs 166, while OIL India gained 2% at Rs 325 on BSE in intra-day trade on Friday. So far in the calendar year 2017, ONGC (down 17%) and Oil India (down 6%) had underperformed the Sensex, which gained 21% till Thursday.

US West Texas Intermediate crude briefly broke above $50 on Thursday, hitting a four-month high, and finished 1.2% higher at $49.89, its highest close since July 31.

“US crude is on track for a nearly 5% gain this week, buoyed by the return of refineries after Hurricane Harvey and stronger indications of demand. Brent is heading for a 2.6% gain and a third consecutive weekly rise,” the Reuters report suggests.

The Organization of the Petroleum Exporting Countries (OPEC) this week forecast higher demand for its oil in 2018 and pointed to signs of a tighter global market, indicating its production-cutting deal with non-member countries is helping to tackle a supply glut. That was followed by the IEA saying the global oil glut was shrinking thanks to strong European and U.S. demand, as well as production declines in OPEC and non-OPEC countries, added reported.

Analysts at Spark Capital remain positive on ONGC mainly led by their view of crude prices of $55/$60/bbl for FY18/19E - stock currently factoring in around $45/bbl crude price; increase in gas prices from current $2.5/mmbtu to >$3/mmbtu by FY19E and production growth of 3% CAGR over FY17-19E.

On three-year outlook, the brokerage firm expect crude prices to inch towards $60-$65/bbl over the medium term led by reversal in global crude inventories; both US and OECD (Organization for Economic Cooperation and Development) commercial inventories have started to decline in the past six months and OPEC’s strategy of production cuts (upto 1H’18 & further if required).

While US Shale production continues to increase, it is unlikely to upset the demand – supply balance. Coupled with global oil demand of >1.2mb/d pa, we believe crude markets are set to rebalance in the medium term, the brokerage firm said in recent report.

At 12:09 PM, ONGC was up 3% at Rs 165 and Oil India up 1.4% at Rs 324 on BSE, as compared to 0.2% decline in the S&P BSE Sensex.