PSU OMCs edge higher on buzz of keeping fuel prices unchanged

Three PSU OMCs rose by 0.14% to 0.39% at 12:40 IST on BSE on reports state-run oil marketing companies have decided against cutting petrol and diesel prices on 1 January 2015.

Meanwhile, the S&P BSE Sensex was down 25.22 points or 0.09% at 27,474.20.

Among PSU OMCs, BPCL (up 0.18%), Indian Oil Corporation (up 0.39%) and HPCL (up 0.14%) edged higher.

PSU OMCs review fuel prices during the middle of the month and on the last day of the month based on the average imported oil price in the preceding fortnight.

Crude oil prices witnessed sharp losses in recent months. However, rupee has weakened against the dollar in the recent days. Lower crude oil prices could reduce under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at controlled prices. However, a weakness in rupee against the dollar will restrict the benefit of falling global crude oil prices to that extent. A weak rupee raises the cost of imports. The government has already freed pricing of petrol and diesel.

The industry was expecting fuel companies to reduce petrol and diesel prices by at least Rs 2 per litre because of the steep fall in international oil rates.

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