Petrol price in Delhi-NCR, rest of India may rise further; here's why
Petrol and diesel prices in Delhi-NCR and rest of the country has touched a new high on Monday amid dramatic fall in rupee and a sharp rise in crude oil rates.
Petrol and diesel prices in Delhi-NCR and rest of the country has touched a new high amid dramatic fall in rupee and a sharp rise in crude oil rates. In Delhi, petrol price touched a record Rs 79.15 a litre and diesel climbed to a fresh high of Rs 71.15, on Monday. The rising fuel price trend is likely to continue further as contributing factors show no sign of relenting.
First, the rupee is expected to fall further, according to a SBI report. SBI's research report 'Ecowrap' today said that the rupee may fall further against the US dollar. On Tuesday, the rupee slumped 16 paise against the American dollar at a life-time low of 71.37. SBI said given the "inefficacy" of sterilised intervention, RBI may follow a relatively hands off policy in forex market for now. "The rupee has now depreciated by 6.2 per cent since June 2018 when RBI started hiking rates. Even as the decline is in consonance with strengthening of the dollar, we believe it may continue further," said the report.
Secondly, international factors contributing to fuel price hike in India are likely to remain strong. "Oil prices rose on Monday, supported by concerns that falling Iranian output will tighten markets once U.S. sanctions bite from November, but gains were limited by higher supply from OPEC and the United States," Anuj Gupta, Deputy Vice President - Research (Commodities and Currencies), Angel Broking Limited, told Zeebiz.com.
Brent crude oil (LCOc1) was up 37 cents at $78.01 a barrel by 2:54 p.m. EDT (1854 GMT). U.S. crude (CLc1) was 30 cents higher at $70.10 on Monday. "Rising global brent crude oil prices is the reason of rising petrol and diesel prices in India. However Depreciation in USDINR is also the reason of rising crude oil prices. From June 16, petrol and diesel prices revised on a daily basis. These prices are now directly co-related with Global brent crude prices and also from Rupee depreciation," Gupta said.
"Globally brent crude prices are expected to trade higher and it is expected to touch $82 to $85 in coming days.. If brent prices touched these level, petrol and diesel prices may impact badly," he added.
Petrol prices have risen by over Rs 2 per litre since August 16, while diesel prices have gone up by Rs 2.42 a litre during this period.
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Falling rupee has pushed up prices of compressed natural gas (CNG) as well as piped natural gas (PNG) also.