Oil Retailers Cut Petrol, Diesel Prices

Petrol and diesel prices were reduced on Thursday for the first time in over two months because of a drop in the cost of production.

Petrol price was cut by 21 paise a litre and diesel by 11 paise, a price notification issued by state retailers said. Petrol in Delhi now costs Rs 82.62 per litre as against Rs 82.83 a litre previously. A litre of diesel now costs Rs 75.58 as compared to Rs 75.69 previously. In Mumbai, petrol now costs Rs 88.08 per litre and diesel Rs 79.24.

This is the first cut stemming from a fall in crude prices in more than two months. The rates were last reduced by a minimum Rs 2.50 per litre across the country on Oct. 5. But that was after the government cut excise duty on petrol and diesel by Rs 1.50 a litre and asked state-run oil retailers to subsidise the fuels by another Re 1 a litre to cushion consumers from rising oil prices. The reduction in BJP-ruled states was more as they matched this cut by an equivalent reduction in local sales tax or value added tax.

The latest price cut follows international oil prices trading near the lowest level in a month on a bigger-than-expected gain in U.S. stockpiles. West Texas Intermediate for November delivery traded 11 cents lower at $69.64 a barrel on the New York Mercantile Exchange, while Brent for December settlement was at $79.89 a barrel on the London-based ICE Futures Europe exchange. Brent had earlier this month hit a four-year high of $86.74 a barrel.

Prior to Thursday's cut in rates, diesel price had risen by Rs 2.74 per litre since Oct. 5 to more than wipe away the excise duty cut and oil firm subsidy. Petrol price had during this period risen by Rs 1.33 a litre.

Before the Oct. 5 price cut, petrol in Delhi had hit an all-time high of Rs 84 per litre and diesel was at record Rs 75.45. This came down to Rs 81.50 per litre for petrol and Rs 72.95 in case of diesel. In Mumbai, petrol had hit a peak of Rs 91.34 hit on Oct. 4 and diesel was sold at a record high of Rs 80.10.

The reduction in excise duty on Oct. 5 was only the second in four years of BJP-led NDA rule. It had raised excise duty on petrol by Rs 11.77 a litre and that on diesel by Rs 13.47 a litre in nine instalments between November 2014 and January 2016 to shore up finances as global oil prices fell, but then cut the tax just once in October last year by Rs 2 a litre.