PSU OMCs gain as crude oil prices decline

Shares of three public sector oil marketing companies rose by 0.22% to 1.15% at 11:00 IST on BSE as global crude oil prices edged lower.

Meanwhile, the S&P BSE Sensex was down 523.41 points or 1.88% at 27,288.43.

Among PSU OMCs, BPCL (up 1.15%), Indian Oil Corporation (up 0.55%) and HPCL (up 0.22%) edged higher.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 63.88, compared with its close of 63.645 during the previous trading session.

Brent crude oil futures edged lower. Brent for August settlement was down 80 cents at $62.46 a barrel. The contract had risen 6 cents or 0.09% to settle at $63.26 a barrel 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, a fortnightly review of fuel prices from PSU OMCs is due in the near future. 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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