Fuel prices to come down if crude dips below $80 a barrel

Mumbai: Public sector oil marketing companies are likely to effect a marginal reduction in the prices of petro fuels once the international price of crude oil falls below $80 a barrel.

Crude prices have declined by over 40 per cent since July, when oil prices had gone up to $147 a barrel, and are ruling around $90 a barrel currently. But fuel prices in India are still ruling at the increased levels announced in June to help state-run oil companies cushion their losses.

Petroleum ministry officials said oil marketing companies are expected to consider a marginal reduction in product prices if the trend continues for another week.

''With the present trend, we are quite hopeful that crude oil would touch $80 a barrel in the next fortnight. And we may see a cut in petrol and diesel prices after it touches this mark,'' said an official.

Crude prices, which fell to an 8-month low at $88 a barrel on Monday, however, got a fresh boost today with the Australian monetary authorities announcing a huge reduction in interest rates in a bid to spur the economy.

The Reserve Bank of Australia announced a surprise cut in its key rate by a full percentage point to 6 per cent - its biggest cut since 1992.

On the other hand, crude prices fell after the US government announce a $700 billion bailout plan for the economy.

Market feels that commodity prices are on a downturn and that crude price may fall further to below $75 a barrel levels soon. They expect oil price volatility to continue till the US and European economies stabilise.