The prices of petrol and diesel witnessed a sharp rise on Sunday. In national capital Delhi, the price of petrol increased by Rs 0.23 at Rs 70.95 a litre. Diesel was being sold at Rs 65.45 a litre (increased by Rs 0.29). In financial capital Mumbai, the petrol and diesel prices were at Rs 76.58/litre (increase by Rs 0.23) and Rs 68.53/litre (increase by Rs 0.31), respectively. Oil prices dipped on Thursday as US crude production quickly approached an unprecedented 12 million barrels per day (bpd) just as worries about weakening demand emerge. US West Texas Intermediate (WTI) crude futures were at $52 per barrel in morning trade in Asia while international Brent crude oil futures were down 34 cents, or 0.6 per cent, at $60.98 per barrel.
Prior to an increase in prices on January 7, rates had cooled to a year’s low of Rs 68.29 for petrol and Rs 62.16 in case of diesel. This followed a decline in rates on almost all days since October 18, 2018. In all, the petrol price has fallen by Rs 14.54 per litre since October 18, 2018, while diesel price declined by Rs 13.53 per litre in two-and-a-half months.
If the last three months are considered, then the price of petrol has fallen by about Rs 12 or about 15%. International benchmark Brent crude oil, which is now trading close to the $60 per barrel mark, has lost about 25% of its value during the corresponding period.
The recent fall in the value of rupee against the US dollar has offset gains from the falling crude oil prices. The rupee has fallen over 3 per cent in the last few days. The crude prices have fallen by over 30 per cent since early October last year when it was at $86 per barrel, making a forecast of $100 crude by January look true.
The twin factors, therefore, have brought down retail fuel rates to two-month low. Retail fuel prices in India depend on both international oil price and the rupee-dollar exchange rate. Also, the pump price of petrol and diesel is dependent on the global rates of benchmark fuel and the rupee-US dollar exchange rate.