Oil stocks edge lower

Three PSU OMCs and two upstream oil producers lost 0.71% to 1.9% at 12:26 IST on BSE after oil minister Dharmendra Pradhan said on Friday that his ministry was not considering any proposal to raise prices of kerosene and LPG.

HPCL (down 1.9% at Rs 413.55), Indian Oil Corporation (down 1.49% at Rs 344), ONGC (down 1.16% at Rs 417), Oil India (down 0.8% at Rs 580), and BPCL (down 0.71% at Rs 597.10) edged lower.

Meanwhile, the S&P BSE Sensex was up 60.56 points or 0.23% at 26,022.62.

Oil Minister Dharmendra Pradhan said on Friday that his ministry was not considering any proposal to raise prices of kerosene and LPG.

Upstream oil and gas producers like ONGC and Oil India pay part of their profits to the government to finance subsidies to oil marketing companies (OMCs) viz. BPCL, HPCL and Indian Oil Corporation, which sell kerosene and LPG to the public at below market prices. Raising of LPG and kerosene prices will enable upstream oil and gas producers to retain larger profits.

Meanwhile, PSU OMCs suffer under recoveries on domestic sale of diesel, LPG and kerosene at controlled prices. The government has already freed pricing of petrol.

Earlier there were reports that the oil ministry is considering recommendations of the Kirit Parikh Committee, which suggested raising cooking gas rates by Rs 250 per cylinder and kerosene prices by Rs 4 per liter.

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