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Diesel can be market-priced by September as crude falls to $100

IANS 19 Aug 2014, 19:34:23 PM IST
IANS
New Delhi: With the losses of state-run oil marketers on diesel sales below cost falling to under a rupee per litre, brokerage firm Goldman Sachs on Tuesday estimated the monthly price hikes would end after September assuming oil prices remain around the current $100 level.
 
Estimating diesel under-recoveries, or losses, to fall to 30 paise a litre after the price hike on September Goldman Sachs said in a report: “This implies we could effectively be done with the monthly cycle of diesel price increases in next two months and diesel will be market-priced.”
 
In January 2013, the government allowed oil marketing companies (OMCs) to monthly raise diesel rates in small doses of 40-50 paise a litre towards wiping out losses.
 
Since then, rates have cumulatively risen by Rs.11.24 per litre in 18 instalments.
 
OMCs, effective Aug 16, are incurring combined daily under-recovery of about Rs.230 crore on the sale of diesel, PDS kerosene and domestic LPG.
 
Meanwhile international crude prices hovered near 14-month lows of $100 a barrel as worries over conflict in Iraq eased, and as higher Libyan oil output added to ample supplies coupled with weak demand. Price of Indian basket on Monday decreased to $100.04 per barrel.