Shares of three public sector oil marketing companies rose by 2.52% to 4.38% at 12:55 IST on BSE following a recent slump in crude oil prices.
BPCL (up 4.38%), HPCL (up 4%) and Indian Oil Corporation (up 2.52%), edged higher.
The BSE Sensex was up 296.71 points, or 1.10% at 27,205.53.
Brent crude futures declined sharply in the past few trading sessions to settle at $51.10 a barrel on Tuesday, 6 January 2015, its lowest settlement since April 2009.
Brent for February settlement was up 19 cents at $51.34 a barrel in Asian trading today, 8 January 2015. The contract had advanced 5 cents to settle at $51.15 a barrel yesterday, 7 January 2015.
Lower crude oil prices could reduce under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at controlled prices. The government has already freed pricing of petrol and diesel.
However, a weakness in rupee against the dollar will restrict the benefit of falling global crude oil prices to that extent. A weak rupee raises the cost of imports of crude oil for PSU OMCs.
In the foreign exchange market, the partially convertible rupee was hovering at 62.89, compared with its close of 63.18 during the previous trading session.
PSU OMCs review fuel prices during the middle of the month and on the last day of the month based on the average imported oil price in the preceding fortnight.
In order to fund the ambitious infrastructure development programme of the Government, particularly the building of 15000 kilometers of roads, during current and next financial year, the Government after market hours on 1 January 2015, increased basic excise duty on petrol and diesel (both branded and unbranded) by Rs 2 per litre, effective from 2 January 2015.
The oil firms had on 1 January 2015, skipped cutting rates of the two fuels that had become necessary as international oil rates plunged to their lowest level since May 2009. The excise duty hike was set off against the reduction in rates that was due because of the plunge in oil prices.
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