PSU OMCs gain after sharp slide in crude oil prices

Two PSU OMCs rose by 0.16% to 0.59% at 11:00 IST on BSE after sharp slide in global crude oil prices yesterday, 2 March 2015.

Meanwhile, the BSE Sensex was up 40.87 points, or 0.14%, to 29,500.01.

Among PSU OMCs, Indian Oil Corporation (up 0.16%) and HPCL (up 0.59%) edged higher. However, BPCL dropped 0.44%.

Brent crude oil futures edged higher after witnessing slump in previous trading session. Brent for April settlement was up 89 cents at $60.43 a barrel. The contract had slumped $3.04 a barrel or 4.85% to settle at $59.54 a barrel during the previous trading session.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 61.92, compared with its close of 61.87 during the previous trading session.

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.

Meanwhile, Indian Oil Corporation (IOCL) had announced on 28 February 2015, increase in retail selling price of petrol by Rs 3.18 a litre at Delhi (including state levies), with corresponding increase in other states. The diesel price was raised by Rs 3.09 a litre. Price raise was with effect from 1 March 2015. IOCL said there has been steep increase in international prices of both petrol and diesel after the last price revision on 16 February 2015. The rupee depreciated slightly during this period. The combined impact of both these factors warrants increase in retail selling prices of both petrol and diesel, IOCL said in a statement. The movement of prices in international oil market and the rupee-dollar exchange rate shall continue to be closely monitored and developing trends of the market will be reflected in future price changes, IOCL said.

Meanwhile, the rates of non-subsidised LPG was increased by Rs 5 per cylinder with effect from midnight of 28 February 2015/1 March 2015, on firming international oil rates. The increase comes on the back of seven straight reductions in rates of non-subsidised or market-priced LPG since August 2014. The customers buy non-subsidised after exhausting their quota of 12 cylinders at subsidised rates.

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.

Jet fuel price was also hiked by a steep 8.2% on 1 March 2015 by the PSU OMCs. The price of aviation turbine fuel (ATF), or jet fuel, in Delhi was hiked by Rs 3,849.97 per kilolitre, or 8.2%, to Rs 50,363 per kilo litre with effect from midnight of 28 February 2015/1 March 2015. PSU OMCs review jet fuel prices on the last day of the month based on the average imported oil price in the preceding fortnight.

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