Shares of three PSU OMCs advanced by 2.18% to 3.59% at 12:23 IST on BSE as crude oil price declined on Tuesday, 8 July 2014.
HPCL (up 3.59% at Rs 400.70), Indian Oil Corporation (up 2.77% at Rs 340.05) and BPCL (up 2.18% at Rs 581.75) edged higher.
Meanwhile, the S&P BSE Sensex was down 50.43 points or 0.2% at 25,531.68
Brent crude slid more than $1 a barrel on Tuesday, 8 July 2014, its seventh straight decline, hitting a one-month low below $109 as Libyan oil exports looked likely to rise and fears eased of supply disruption in Iraq. Brent crude for August delivery fell by $1.30 to settle at $108.94 a barrel on Tuesday, 8 July 2014. Brent crude oil futures for August delivery were up 1 cent or 0.01% at $108.95 a barrel, today, 9 July 2014.
Lower crude oil prices will decrease under-recoveries of state-run oil marketing companies (PSU OMCs) on domestic sale of diesel, LPG and kerosene at government controlled prices. The government has already freed pricing of petrol.
Oil Minister Dharmendra Pradhan last week said that his ministry was not considering any proposal to raise prices of kerosene and LPG.
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Upstream oil and gas producers like ONGC and Oil India pay part of their profits to the government to finance subsidies to oil marketing companies (OMCs) viz. BPCL, HPCL and Indian Oil Corporation, which sell kerosene and LPG to the public at below market prices. Raising of LPG and kerosene prices will enable upstream oil and gas producers to retain larger profits.
Earlier there were reports that the oil ministry is considering recommendations of the Kirit Parikh Committee, which suggested raising cooking gas rates by Rs 250 per cylinder and kerosene prices by Rs 4 per liter.
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