Local oil basket breaches $60

Price jumps $1.5 to $61.19 a barrel.

The domestic crude oil basket breached the $60 a barrel barrier for the first time this quarter. It today jumped a hefty $1.5 to $61.19 a barrel, even as London Brent prices touched $ 65 a barrel during the day's trading.

The domestic oil basket has been hardening ever since the cut in petrol and diesel prices two days ago. However, it is still around 19 per cent lower than the all-time high of $75.20 on August 8.

Meanwhile, international crude oil prices have been firming up over the past couple of days on expectation of Opec production cut and forecasts of cold weather on the US east coast.

The US Energy Department reported that the country's heating oil supplies had fallen 1.06 million barrels to 59.1 million last week.

Inventories of crude oil and gasoline also declined in the US, the world's largest energy consumer, according to the department's weekly petroleum inventory.

At a meeting in Abuja, Nigeria, on December 14, Opec will decide whether to cut production a second time this year as demand slows. The organisation, on October 20, agreed to cut 1.2 million barrels of daily output at a meeting in Doha, Qatar, to keep prices from tumbling further.

Analysts said with the latest hike in the local crude oil price, the domestic refining and marketing companies were set to lose an additional Rs 6,000 crore. This is over and above the under-recoveries they were experiencing since the government cut prices of petrol and diesel by Rs 2 and 1, respectively, two days ago.

Refining margins for this quarter till date have already been at a seven-quarter low as the spread between sweet and heavy has contracted on expectation of an Opec production cut.

The prices of free-to-trade distillates such as naphtha and fuel oil also rose on domestic commodity exchanges today.

While naphtha posted a Rs 400 rise to Rs 26,562 a tonne from Rs 26,162 a tonne, fuel oil went up by Re 1.

Furnace oil declined by Rs 889 to Rs 14,904 a tonne from Rs 15,732 a tonne. Analysts, however, said this was a reflection of last fortnight's prices rather than a reaction to today's oil price rise.