The oil marketing companies (OMCs) are likely to cut their under-recoveries on sale of petrol and diesel in the second fortnight of this month by as much as 50 and 85 per cent, respectively, as crude oil prices continue to move downwards.
The Indian basket of crude has averaged $64.70 a barrel in the month so far, down 6.4 per cent from the June average of $69.12. However, it is still higher than the current year’s average (till date) of $60 a barrel, while being significantly lower than the previous fiscal’s average of $83.57 a barrel.
The OMCs are at present incurring an under-recovery of Rs 2.48 a litre on petrol and Rs 1.83 a litre on diesel. This despite last week’s price hike of Rs 4 a litre on petrol and Rs 2 a litre on diesel. “The under-recovery on petrol is expected to come down to Rs 1.23 a litre in the next fortnight, while diesel under-recovery could slip down to Rs 0.27 a litre,” said an OMC official.
By early July, benchmark crude prices reached an eight-week low of around $60 a barrel, as the four-month rally in oil prices stalled. “Growing concerns about the path of economic recovery, persistently high oil stocks and current weak demand undermined prices,” the International Energy Agency (IEA) said in its July Oil Market Report, released today.
IEA said crude oil demand in India is expected to go up by 3.4 per cent, despite a slowdown, to 3.3 million barrels a day from 90,000 barrels a day in 2009. This year, the demand grew 3 per cent as against 2.4 per cent last year.
Global oil demand will bounce back by 1.7 percent, or 1.4 million barrels per day (bpd), year-on-year, in 2010, led by rising consumption in emerging economies, IEA said.
The agency expects oil demand to reach 85.2 million bpd next year, from 83.8 million bpd this year. It said the demand outlook for this year was “effectively unchanged” — down 2.9 percent, or 2.5 million bpd, compared with last year.
