The Hindu Business Line : Indian crude basket dips to $43.17 a barrel

Reason for fall
October recorded dip in growth for all oil products except in diesel and petrol.
The decline was due to major festivals such as Diwali and Dussera both falling in the same month leading to decline in commercial activities as labour availability was reduced.”

Our Bureau

New Delhi, Dec. 3 The Indian crude basket has hit a fresh low for the current fiscal on Tuesday at $43.17 a barrel. The crude basket, which has fallen 70 per cent since it hit a high of $142.04 a barrel in July, has averaged $102.09 a barrel so far in the fiscal. The last time the basket had been below $50 a barrel was in the financial year 2005.

The public sector oil marketing companies (OMCs), which have been incurring revenue loss on sale of petrol and diesel, are making a profit as a result. They, however, continue to incur revenue loss on cooking fuels.

The OMCs – Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation – are now making a profit of Rs 14.89 a litre on petrol and Rs 3.03 a litre on diesel. They, however, continue to incur revenue loss on sale of cooking gas and kerosene. The under-recovery on kerosene sold under the public distribution system stood at Rs 17.26 a litre, while that on domestic LPG was Rs 148.38 a cylinder.

Imports up 13%

According to data available, the country’s crude imports in October were up 13.2 per cent to 11.365 million tonne (mt) on higher purchases by private refiners. Crude imports by private refiners were up 54.6 per cent. Reliance Industries Ltd (RIL), which is ready to commission its new refinery in Jamnagar, is understood to have increased crude purchases.

The domestic crude oil production fell 0.3 per cent in October to 2.916 mt against the corresponding period last year. The natural gas output in October fell nearly 0.9 per cent to 2.831 billion cubic metre. The petroleum refining output in October rose 5 per cent on year to 13.303 mt. The refiners had a capacity utilisation of 105.1 per cent in October.

Fall in sales

However, domestic oil product sales in October fell by 1.7 per cent to 10.71 mt (10.89 mt in October 2007-08). According to the Petroleum Ministry officials, “October recorded dip in growth for all oil products except in diesel and petrol. The decline was due to major festivals such as Diwali and Dussera both falling in the same month leading to decline in commercial activities as labour availability was reduced.”

Other reasons cited for the decline in sales of petroleum products were rumours of possible retail price reduction due to fall in crude prices. This had resulted in dealers reducing inventories at retail outlets, with the OMCs reporting decrease in upliftments during October last week.

Diesel growth at 6.4 per cent to 4.24 mt in October was lowest during 2008-09. Diesel demand is expected to ease over the next few months due to lower prices of alternative fuels such as naphtha and fuel oil.

With private sector player Essar also activating its retail outlets, though insignificant in volumes its petrol and diesel sales have recorded increase in October. Sales volumes are expected to increase in November, the official said.

Petrol sales in October were up 10.1 per cent to 936,500 tonne. While imports of petroleum products rose by 6.9 per cent to 1.7 mt, exports declined by 11.6 per cent in October.

Related Stories:
Falling oil prices: Grab the opportunity for reform
Is it time to expect retail prices of petrol, diesel to fall?
Indian crude basket drops to $45.50/barrel
Domestic crude oil basket hits $142 a barrel