Petrol Price on 5th December reached to over Rs 83 per litre-mark in Delhi. This has happened for the first time in more than two years. After a rally which happened in international oil prices forced a increase in rates in the last fortnight.
Petrol price on 5th December was raised by 27 paise per litre. While the diesel price was raised by 25 paise, according to a price notification which was given by oil marketing companies.
Petrol price in Delhi got a sudden rose to Rs 83.13 per litre. Which used to be around Rs 82.86 per litre. Diesel rates went up from Rs 73.07 to Rs 73.32 per litre just in a day.
This was marked as the highest rate for petrol and diesel since September 2018. After that there was a sudden the increase in rates since the month of November 20. When oil companies resumed daily price revision after nearly a two-months break.
In last 16 days, the petrol price has gone up by Rs 2.07 per litre and talking about diesel rate which has risen by Rs 2.86.
ICICI Securities said that the hopes for vaccine are affecting the price rates and thus the oil prices up.
Brent crude oil is up 34 per cent from lows in the end of the month October 2020 by the hope that Covid-19 vaccines coming into existence would lead to demand recovery.
The oil price is at a sudden rise, despite a second wave of Covid which happened in Europe and and has faced a increase in Libyan oil output from 0.1 million barrels per day (that is bpd) to 1.25 million bpd.
Oil cartel Opec plus (called Opec+) is thinking and deciding to raise output from January 2021 even more than earlier. And is likely to ensure global supply shortage even in the first quarter of 2021. Thus, Opec+ has done its best to help prevent supply surplus until the vaccine boosts demand.
IEA estimates the global oil supply deficit at 2.1-2.8 million bpd in the year 2020. However, a surplus of 0.4 million was likely in Q1 2021 if Opec+, as agreed in April 2020, was to recue the output cuts from 7.7 million bpd to 5.8 million bpd from the moneht of January.
ICICI Securities said that However, they now estimate supply deficit of 0.5 million bpd in Q1 2021 and 0.2-2.8 million bpd in Q2-Q4. Also, as Opec+ has decided to raise the output level by just 0.5 million bpd in January 2021 and by not more than 0.5 million bpd in later months and only after deliberations.
Before November 20, petrol prices in India had not rose much and has been stable and constant since September 22 and diesel rates hadn’t changed since October 2.
Several Public sector oil marketing companies revise rates of petrol and diesel, daily based on benchmark international oil price and foreign exchange rate.
They had been marking the rates since the pandemic broke out with a view to avoiding volatility in retail prices.
The 58-day pause in petrol price and 48-day status quo on diesel rates came in time by no change in rates between June 30 and August 15 and the 85-day status quo between March 17 and June 6.