PSU OMCs gain as Brent drops towards 5-year low

Shares of three public sector oil marketing companies rose by 0.83% to 1.62% at 9:55 IST on BSE as global crude oil prices fell.

Meanwhile, the S&P BSE Sensex was down 4.76 points or -0.02% at 27,390.97.

Among PSU OMCs, BPCL (up 1.62%), Indian Oil Corporation (up 0.83%) and HPCL (up 1.5%) edged higher.

Brent oil extended losses into a fourth session, with prices hovering close to a more than five-year low above $57 per barrel, as persistent worries about a global supply glut offset concerns about output disruptions in Libyan. Brent for February delivery was down 2 cents to $57.86, after tumbling to $57.37 in the previous session, the lowest level since May 2009.

Lower crude oil prices could reduce under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at controlled prices. The government has already freed pricing of petrol and diesel. 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.

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.

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