New ministry may avoid price hike

DOMESTIC REVIEW/ ENERGY

International oil prices continued to rule high last week with Brent (dated) touching a new 13-year record of $ 37.19 a barrel on Tuesday.

With the time for a revision of domestic petroleum prices approaching fast after the formation of the new government at the Centre, people have already started speculating about the timing and size of the price hike.

Petroleum ministry officials, however, are of the view that in case a weak coalition takes over at the Centre, there may not be any price hike in the near future.

The market remained concerned over tight supplies despite a call by Saudi Arabia, world's biggest exporter for the Organisation of Petroleum Exporting Countries (OPEC), to raise oil output next month.

Crude oil has been riding a rollercoaster during the week, dropping $1 on Monday when Saudi Arabia proposed that the OPEC producers' cartel raise output limits by 1.5 million barrels a day to cool down red-hot prices, which have surged 20 per cent this year.

However, the market bounced back to highs not seen since just before the first Gulf War on doubts that the OPEC increase would tip the supply-demand balance in an already constricted market.

The already hot market was further helped by surging Chinese demand and fears of disruptions to oil flows from the volatile West Asia which has two-thirds of global reserves.

The international benchmark Brent (dated) crude, which was hovering at $36.85 a barrel on May 5, moved up to $ 37.08 a barrel on May 7, to be quoted at $ 37.19 a barrel on May 11.

Jet fuel (Singapore), which was being quoted at $ 45 a barrel on May 5, moved up to $ 47.93 a barrel on May 7, and touched $ 45.45 a barrel on May 11.

Prices of gas oil (Singapore) with 0.5 per cent sulphur, which were ruling at $ 43.28 a barrel on May 5, moved up to $ 44.18 a barrel on May 7, and touched $ 42.08 a barrel on May 11.

Naphtha (Singapore), which was being quoted at $ 39.38 a barrel on May 5, touched $ 39.60 a barrel on May 7, and was quoted at $ 37.23 a barrel on May 11.

Prices of unleaded petrol (fob Singapore), which were ruling at $ 49.43 a barrel on May 5, moved up to $ 49.03 a barrel on May 7, and touched $ 45.40 a barrel on May 11.