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Fuel prices fall on oil slip, rupee gain

Petrol, at Rs. 73.24 in Delhi, dips to aneight-month low

Fuel prices hit new lows on Thursday, with petrol falling to an eight-month low and diesel to a nearly four-month low on the back of falling global oil prices.

Petrol in Delhi cost Rs. 73.24 per litre on Thursday following a 33 paise cut. Diesel cost Rs. 68.13 per litre following a 36 paise cut.

The Indian basket of crude oil has been on a downward trajectory for the last two months, coming in at $59.9 on Wednesday since its high of $85.2 a barrel on October 4.

“Fuel prices are a function of crude oil prices and the rupee-dollar parity,” K. Ravichandran, group head, Corporate Sector Ratings, ICRA, said. “The key thing to watch out for is the G20 summit and the December 6 meeting of OPEC, where we will have greater clarity on the tariff disputes and the OPEC decisions to cut supplies.”

“But even if OPEC does resort to production cuts, oil prices can at best increase to $65-70,” Mr. Ravichandran added. “Supply pressure is very much there because of record production levels in the U.S. and even Russia has been ramping up. The rupee has also stabilised at about Rs. 70 to a dollar, and so given these two factors, I don’t expect a major reversal in the retail prices in the near term unless the government wants to again increase the excise duty after their cut in October.”

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