New Delhi: India’s oil marketing companies on Friday cut petrol price by Rs 3.77/litre and diesel by Rs 2.91/litre following the fluctuations in crude prices which have been swinging between the push and pull from coordinated output cuts by major producers on one side, and rising US stockpiles on the other.
The three state-run oil marketing firms – Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp review retail fuel prices periodically and usually revise them every fortnight to pass on the impact of global crude oil prices on their purchases.
OPEC (Organisation of Petroleum Exporting Companies) and other major oil producers of the world in November agreed to trim output to help balance the markets and provide a support to falling prices. OPEC, a group of 13 oil producing nations, decided on November 30 to cut global crude oil output by 1.2 million barrels per day. It was first such agreement between these producers since 2008.
Oil has mostly traded above $50 a barrel since OPEC and 11 other countries started trimming supply in January, recently falling to a three-month low as simultaneous revival in US shale drilling offset the OPEC cuts. The rise in prices was recorded after Saudi Arabia said 80% of the agreed cuts have been achieved since the deal became effective on January 1, before falling again in the most recent trading sessions, as the drilling in the US climbing to highest in a year countered OPEC’s efforts to limit the supply.
Brent crude fell 53 cents to $52.43 a barrel on Wednesday. The price of Indian basket of crude oil has risen to $53.7/bbl for the fortnight of March 16, from $53.05/bbl on January 15, when the last revision was done. Though, the rupee, which has appreciated against the US dollar in recent trading sessions, takes some of the pressure off Indian buyers. The Indian basket of crude oil comprises sour grade (Oman & Dubai average) and sweet grade (Brent dated) of crude oil processed in Indian refineries in the ratio of 71.03:28.97.
Now, as the global crude oil prices have started sliding on the back of rising output in the US partly offsetting the cuts by OPEC and other major producers, Indian oil refiners may find room to extend the cut in retail fuel prices in the coming fortnight. This may be further aided by the recent rebound in rupee against dollar after Prime Minister Narendra Modi-led BJP’s landslide win in UP state elections. However, inventories stockpiled in recent weeks at higher prices may weigh on the Indian oil companies.