Petrol and diesel prices were on Wednesday hiked by 24-25 paise per litre, the steepest increase since July 5 Union Budget, as a fallout of turmoil in global oil markets following drone attacks on Saudi Arabian crude oil facilities.
The basket of crude oil that India buys has hit a decade high of $121 per barrel, but retail selling prices of petrol and diesel continue to remain frozen. The Indian basket on June 9 touched $121.28, matching levels seen in February/March 2012, according to data available from the oil ministry's Petroleum Planning and Analysis Cell (PPAC). As per the PPAC, the Indian basket of crude oil averaged $111.86 per barrel between February 25 and March 29 - the immediate period after Russia's invasion of Ukraine sent oil on fire.
The rupee has lost 32 paise, or 0.50 per cent, in five trading days
The Consumer Price Index-based inflation rose to 5.11% in January
However, the hefty initial gains of the rupee, which had jumped to 61.05 intra-day, were substantially erased on month-end demand for US dollars from private oil firms and some defence-related purchases, amid fall in domestic stocks.
The rupee weakened even as the dollar fell against major global currencies
Prices are sustainable and not just driven by speculative gains
Petrol price on Wednesday touched a new high of Rs 84.45 per litre in the national capital after state-owned fuel retailers hiked prices after a five-day hiatus. Petrol and diesel prices were hiked by 25 paise per litre each, according to a price notification from oil marketing companies. In Delhi, petrol now costs Rs 84.45 per litre and diesel is priced at Rs 74.63. In Mumbai, petrol comes for Rs 91.07 a litre and diesel for Rs 81.34. This is the highest ever price of petrol in Delhi, while diesel is at a record high in Mumbai.
US commercial crude oil stocks were forecast to have risen by 3 million barrels last week
Over the previous eight sessions, Brent had lost about $7 a barrel, almost 20 per cent
The rupee ended marginally lower by three paise at 66.36 against the US dollar.
The rupee had lost 27 paise to close at more than 5-week low.
The rupee ended the day stronger against the dollar.
While OPEC has been unable to agree on an output freeze in an effort to support prices, Iraq was the latest Middle East producer to raise its exports quota
The rupee had dropped by 18 paise to end at 66.40
Oil edged up on Tuesday, steadying after a 5 per cent plunge in the previous session that saw prices touch fresh 5-1/2-year lows in an oversupplied market.
Oil sank to the lowest level in a month after shedding all of its gains from the US-Iran clash as traders waited to see whether any further hostilities will disrupt exports from the East Asia.
Rupee gained on increased selling of the US currency by banks and exporters
No change in retail prices as oil marketing firms to absorb increase
Crude oil shipments from the US to India rose to the highest levels in November since the conflict began in Ukraine in late February, sparking hopes of a resurgence in oil flows from the US to the subcontinent, reveals shipping data. Shipments from the US have surged as Western nations prepare to impose additional sanctions on Russian crude flows. The US shipped around 450,000 barrels per day of crude last month to India, twice that of shipments in October, according to data from London-based commodity intelligence provider Vortexa.
Profit-booking and selling pressure on below-normal monsoon forecast, marred sentiments, traders said.
The domestic currency had gained by 80 paise, or 1.19 per cent, in previous five trading days.
The Indian rupee resumed sharply lower at 66.65 per dollar against last Friday's level of 66.48.
RBI fixed the reference rate for the dollar at 66.2930 and euro at 74.8978.
The domestic currency tumbled by 45 paise or 0.68 per cent in two days.
A massive drone strike on the world's largest crude-processing facility operated by Saudi Arabia's Aramco has driven oil prices to their highest level in nearly four months. The attack has knocked out over half of Saudi Arabia's production as it cut 5.7 million barrels per day or over 5 per cent of the world's supply.
Petrol and diesel prices are likely to be hiked this week as oil companies prepare to pare losses accumulated from keeping rates steady for over four months in the run-up to assembly elections in five states, including UP, despite international oil prices jumping to a 13-year high of $140 per barrel. West Texas Intermediate crude futures, the US oil benchmark, rose to $130.50 per barrel on Sunday evening, its highest since July 2008, before retreating. The international benchmark, Brent crude, hit a high of $139.13 at one point overnight, also its highest since July 2008.
The trading range for the Spot USD/INR pair is expected to be within 66.20 to 67.00.
Rupee is under pressure against the dollar say currency watchers.
Both crude benchmarks are now down around 20 per cent since their last peak in June
Weakness of dollar in the overseas market also boosted the rupee value.
A government official said out that with hardly any economic activity, an immediate duty hike will not be productive and could be announced once the lockdown eases and demand revives.
The rupee had jumped by 164 paise or 2.39 per cent in previous six trading days.
Cooking gas LPG price on Wednesday was hiked by Rs 15 per cylinder in line with a surge in international fuel prices. Rates of both subsidised and non-subsidised LPG prices were hiked, oil company officials said. Cooking gas now costs Rs 899.50 per cylinder in Delhi.
The Rupee is seen strengthening against the dollar.
The dollar strengthened against major world currencies.
A swift recovery in oil demand in India is not only helping the stability of the global market, it is giving huge fiscal headroom to the government in terms of additional excise duty.
On Friday, the rupee had gained 9 paise to close at a fresh one-week high of 67.08.
The rupee on Monday ended lower by 23 paise to close at an over two-week low of 67.31 against the US currency.
The domestic currency has dropped by 62 paise or 0.93 per cent in four trading days.
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