Petrol, diesel prices see 2nd cut in a month

State-run fuel retailers on Friday reduced the pump prices of petrol and diesel on the back of fall in rates in regional trading hubs. 

In Delhi, petrol would become cheaper by Rs 2.43 a litre and diesel by Rs 3.60. The reductions include local levies and would vary marginally according to prevailing VAT rates Commodity Market Trading Tips

This is the sharpest-ever cut in diesel price, which had seen a reduction of Rs 3.37 a litre on October19, 2014 as the benefit of falling crude price was passed on to consumers after the Modi government deregulated its pricing. 

A sharp reduction in diesel price would help ease inflation. Diesel is the main transportation fuel and has a bearing on prices of goods and commodities. Cheaper diesel would also reduce input costs of farmers who use it widely to operate pumps for irrigating crops. 

Petrol and diesel prices were last cut by Rs 2 a litre, excluding state taxes, on July 16 but the benefit did not flow to consumers in Delhi because of the Arvind Kejriwal government's move to jack up VAT. Rather, the increase in VAT from 20% to 25% on petrol saw price going up by 28 paise. Rates of diesel, on which VAT was raised from 12.5% to 16.6%, saw a smaller reduction of 50 paise Stock Market Trading Tips

According to market leader IndianOil Corporation, a drop in the rupee-dollar exchange rate shaved some of the benefit of lower prices in the trading hubs. Petrol and diesel prices are tuned to a fortnight's average of benchmark rates in Singapore and Dubai. These prices vary according to demand and supply from refineries, which explains occasions such as June 16 when petrol price was raised by 64 paise, while diesel price was reduced by Rs 1.35 per litre. 

Among other factors determining the crack -- or difference between crude and product prices -- the rupee exchange rate plays key role among other factors Indian Stock Market Astrology Prediction

Fuel prices are expected to remain subdued in the near term unless there is a spurt in demand or there is a major outage in global refining capacity; or the rupee falls steeply against the dollar. 

The oversupply situation international crude market also weighs on the refining industry and affects margins. On Thursday, Abdullah El-Badri, Opec secretary-general, ruled out any production cut in response to lower prices and expectations of possible addition of Iranian supplies. The statement prompted a slight fall in the benchmark crudes Financial Astrology Trading Tips