Naphtha, fuel oil prices slashed

In line with the global trend of softening prices, oil marketing companies today decided to cut naphtha prices by Rs 1,700 a tonne and fuel oil prices by Rs 700 a tonne.

Naphtha price were revised from Rs 27,342 a tonne last fortnight to Rs 25,642 a tonne for the current fortnight. Fuel oil prices were revised from Rs 15,514 to Rs 14,814.

These prices will be reviewed again in a fortnight, and in the next round (in the first week of February), aviation turbine fuel (ATF) may also see a downward revision in price if the current crude oil price trends persist, sources in the oil marketing company Bharat Petroleum said.

The BPCL executive said these cuts were in keeping with the downward movement of international petroleum and petroleum product prices. International prices for naphtha had fallen by $10 a barrel, he said.

Crude price has witnessed sharp fall over the last six weeks. The benchmark London Brent spot prices have fallen from $65 a barrel to $50.15, today.

Sources in oil marketing companies pointed out that most of the trade in the free-to-trade commodities takes place in spot market, for current delivery, therefore, their prices are linked to spot crude oil prices.

Crude oil prices have been moving south for the last few days, on the back of sluggish demand from the United States, which is witnessing a warmer than expected winter.

The last fortnight of December witnessed a spike in prices as the US winter holiday season peaked and fuel oil consumption, and consequently, prices rose in the Indian market too.

However, with the return of warmer weather, prices have fallen again. Last fortnight too, naphtha and fuel oil witnessed a fall in prices.

Naphtha is used primarily in the fertiliser, power and petrochemical industries, which consume around 95 per cent of the country's production, while fuel oil is primarily used as boiler fuel and for heating.

There are around 25 such free to trade products such as bitumen, aviation turbine fuel, benzene, lab feed stock and SBP which constitute about 20 per cent of the crude oil basket.