NEW DELHI: Global oil prices on Friday rebounded after Thursday's dramatic fall but the see-saw since Osama bin Laden's death has led to a view that the government may opt to pause before raising fuel prices.
Agency reports said oil rebounded in Asia as traders capitalized on lower prices to buy into the market. New York's main contract, West Texas Intermediate for June delivery, rose 78 cents to $100.58 a barrel. It had slumped over 8% to $99.80 on Thursday.Brent North Sea crude gained $1.28 to $112 after declining more than $10 overnight.
The ministerial panel is scheduled to meet on May 11 to consider raising prices of diesel and cooking gas, which are controlled by it. Simultaneously, the oil ministry was also expected to give state-run oilmarketers a cue to raise petrol price by Rs 3 a litre.
Oilmarketers are free to revise petrol price but seldom do so without nod from the government, the owner.
"The see-saw is temporary. Fundamentals remain unchanged - be it the geopolitical situation, supply scenario or dollar's strength. Nobody expects oil to settle below three digits. Really, there is no option but to raise fuel prices if the government wants to keep the oil firms healthy without taking a bigger hit in government's finances," an analyst with an investment bank said requesting neither he nor his institution be named.
Oil company executives said the street prices of fuels roughly correspond to $90-95/barrel crude. So even at present lower levels of crude they need to raise prices to reduce losses.
The analyst said the issue essentially is the losses accumulated by the oil companies in 2010-11, estimated at Rs 180,000 crore, and mitigate losses in the coming days. Last heard, they were losing about Rs 8.50 a litre on petrol, Rs 16.76 a litre on diesel, Rs 29.69 on kerosene and Rs 329.73 on a cooking gas refill.
Crude declined on the news of Osama's killing, essentially as it lifted expectations of a more stable situation in West Asia and dollar gained against all major currencies. A stronger dollar makes oil costlier for buyers using other currencies and the prices come down to balance the purchase and intrinsic value of the commodity
Agency reports said oil rebounded in Asia as traders capitalized on lower prices to buy into the market. New York's main contract, West Texas Intermediate for June delivery, rose 78 cents to $100.58 a barrel. It had slumped over 8% to $99.80 on Thursday.Brent North Sea crude gained $1.28 to $112 after declining more than $10 overnight.
The ministerial panel is scheduled to meet on May 11 to consider raising prices of diesel and cooking gas, which are controlled by it. Simultaneously, the oil ministry was also expected to give state-run oilmarketers a cue to raise petrol price by Rs 3 a litre.
Oilmarketers are free to revise petrol price but seldom do so without nod from the government, the owner.
"The see-saw is temporary. Fundamentals remain unchanged - be it the geopolitical situation, supply scenario or dollar's strength. Nobody expects oil to settle below three digits. Really, there is no option but to raise fuel prices if the government wants to keep the oil firms healthy without taking a bigger hit in government's finances," an analyst with an investment bank said requesting neither he nor his institution be named.
Oil company executives said the street prices of fuels roughly correspond to $90-95/barrel crude. So even at present lower levels of crude they need to raise prices to reduce losses.
The analyst said the issue essentially is the losses accumulated by the oil companies in 2010-11, estimated at Rs 180,000 crore, and mitigate losses in the coming days. Last heard, they were losing about Rs 8.50 a litre on petrol, Rs 16.76 a litre on diesel, Rs 29.69 on kerosene and Rs 329.73 on a cooking gas refill.
Crude declined on the news of Osama's killing, essentially as it lifted expectations of a more stable situation in West Asia and dollar gained against all major currencies. A stronger dollar makes oil costlier for buyers using other currencies and the prices come down to balance the purchase and intrinsic value of the commodity
