labels: Economy - general
Oil falls below $92; Deora for fuel price cuts at $67 news
16 September 2008

Murli DeoraMumbai: The price of crude oil has fallen below $93 in the international market but India would consider a cut in oil prices only if import prices of the commodity falls below $67 a barrel, petroleum minister Murli Deora said today.

"There is no case for cut in fuel prices now," Deora said on the sidelines of an FICCI seminar on financial inclusion.

Deora's statement comes amidst increasing speculation that the government, which is fighting inflationary pressures, may be inclined to cut fuel prices ahead of an election year. Inflation in the country touched a 13-year high of 12.67 per cent before moderating to around 12 per cent at the end of August.

US light sweet crude for October delivery tumbled to a new 7-month low at $91.76 a barrel today, nearly four per cent down from yesterday's level and the average price of Indian crude oil import basket dipped to about $91 on Monday.

The October contract for light sweet crude on the New York Mercantile Exchange plunged $3.95 to $91.76 a barrel from yesterday's level of $95.71 a barrel.

''We welcome fall in oil prices but still public-sector companies are losing money. The day when the prices fall to $67 per barrel, it can be considered," Deora said.

The fall in crude prices has been partially offset by a fall in the value of the rupee, which touched a 2-year low of 46.53 against the greenback in early trade. The fall of the Indian currency has raised the rupee cost of oil even as oil has fallen in dollar terms.

In fact, the rupee's fall has been mainly due to heavy demand from oil firms and concerns of  capital outflows following upheaval on Wall Street and failure of some top US banks.

The high fuel subsidy in India and China in the past has only helped to drive up demand for oil and hence its prices. The recent moderate hike in fuel prices in India has in some way helped to arrest the soaring demand for petrofuels.

Domestic oil product sales in July rose an annual 7.8 per cent despite crude prices touching a record high at $147 a barrel.

Oil prices dropped more than $3 in Asian trade on fears for the health of the global economy, after the collapse of US investment bank Lehman Brothers.

State-run Indian Oil, Hindustan Petroleum and Bharat Petroleum continue to lose hundreds of crores of rupees a day on subsidised sale of petrol, diesel, domestic LPG and kerosene despite crude prices falling below$100 a barrel.


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Oil falls below $92; Deora for fuel price cuts at $67