PSU OMCs gain & oil exploration firms decline after slide in crude oil prices

Four upstream oil companies fell by 0.71% to 1.96% and three PSU OMCs gained by 0.4% to 2.13% at 11:10 IST on BSE after crude oil prices dropped sharply yesterday, 3 August 2015.

Meanwhile, the S&P BSE Sensex was down 141.61 points or 0.51% at 28,041.91.

Among upstream oil companies, Cairn India (down 1.96%), ONGC (down 1.7%), Oil India (down 1.05%) and Reliance Industries (RIL) (down 0.71%) declined.

Fall in crude oil prices would result in lower realizations from crude sales for oil exploration firms.

Among downstream oil companies, HPCL (up 0.4%), BPCL (up 2.13%) and Indian Oil Corporation (IOCL) (up 1.26%) gained.

Lower crude oil prices could decrease under-recoveries of state-run oil marketing companies (PSU OMCs) on domestic sale of diesel, LPG and kerosene at controlled prices. The government has already freed pricing of petrol.

Meanwhile, in the global commodities markets, Brent crude oil futures edged higher after sliding below the $50 a barrel mark yesterday, 3 August 2015 for the first time since January 2015 as Iran vowed to boost production immediately after sanctions are lifted and manufacturing in China slowed. Brent for September settlement was currently up 17 cents at $49.69 a barrel. The contract had dropped $2.69 a barrel or 5.15% to settle at $49.52 a barrel during the previous trading session.

Meanwhile, PSU OMCs had announced reduction in petrol, diesel and jet fuel prices after market hours on Friday, 31 July 2015.

Indian Oil Corporation (IOCL) announced reduction in petrol and diesel prices with effect from 1 August 2015. The retail selling price of petrol was decreased by Rs 2.43 per litre at Delhi (including state levies) with corresponding price revision in other states. With the latest revision, the price of petrol in Delhi has become Rs 64.47 per litre. The retail selling price of diesel was reduced by Rs 3.60 per litre at Delhi (including state levies) with corresponding price revision in other states. With the latest revision, the price of diesel in Delhi has become Rs 46.12 per litre.

IOCL said that since last price change on 16 July 2015, there has been a decrease in international prices of both petrol & diesel. Rupee-dollar exchange rate has, however, depreciated during this period. Combined impact of both these factors warranted a downward revision in prices, the impact of which is being passed on to the consumers with this price decrease. The movement of prices in international oil market and rupee-dollar exchange rate shall continue to be monitored closely and developing trends of the market will be reflected in future price changes, IOCL said in a statement.

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.

IOCL also announced reduction in jet fuel prices by 9.47% at Rs 46,407.36 per kilolitre in Delhi, with corresponding changes in other states. The revised prices took effect from 1 August 2015. PSU OMCs review jet fuel prices on the last day of the month based on the average imported oil price for the month.

IOCL further announced reduction in prices of non subsidised 14.2 kilograms liquified petroleum gas (LPG) cylinder by Rs 23.50 or 3.86% to Rs 585 per cylinder in Delhi, with corresponding changes in other states. The revised prices took effect from 1 August 2015.

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