Retail fuel price cut just dollars away

The country could be just $2-3 away from another petrol and diesel price cut. Petroleum Secretary MS Srinivasan today confirmed that the government would "consider a cut in prices of petrol and diesel if the price of the Indian basket of crude falls to $50 a barrel."

Oil fell $1 on Tuesday to near $55 a barrel as an unusually warm US winter and concern that funds were losing interest in oil pressured prices.

The petroleum secretary, however, said that crude oil prices are unlikely to dip below $50 a barrel in the long-term.

The lowest price in 2007 was on January 5, when price was less than $3 away from the price-review benchmark the government has set for itself.

The Indian basket of crude oil, which comprises Oman-Dubai sour grade crude and Brent sweet crude in 58:42 ratio, has averaged $54.72 a barrel thus far this month. The average price in December 2006 was $60.35.
 

STORY THUS FAR
Period	$/barrel
8-Jan	53.48
December average	60.35
November average	57.80
October average	57.27
September average	61.04
August average	70.84
April-June average	67.13
July-September average	67.71
October-December average	58.45

Petroleum Minister Murli Deora had on Monday said that the government was keeping a close watch on international crude oil prices and that a cut in retail prices was possible if crude oil prices fell to $50 a barrel.

"The price drop has taken place only in the last 3-4 trading sessions due to the mild winters in the US.

Once prices stabilise over the next month than the picture will be clearer. However, a retail price cut would certainly hurt the oil marketing companies which are already making under-recoveries on petro products," said V Raghuraman, principal adviser, CII.