Oil prices volatile; stability vital before more cuts: BPCL

Slight relief for vehicle owners, after oil marketing companies (OMC) cut petrol prices effective midnight. The cut will vary from Rs 2.46 to Rs 3.22 per litre in different parts of the country.

So, Delhi (Rs 2.46/l), Mumbai (Rs 3.10/l), Chennai (Rs 3.13/l), Kolkata (Rs 3.07/l).Also Read: OMCs cut petrol prices by Rs 2.46/l with effect midnight
This cut comes before the fortnightly meeting of the OMCs, and is on the back of crude prices falling to USD 90 per barrel levels. This is the second rollback announced by OMCs after the steep hike of Rs 7.50 per litre in May. Overall, the rollback is now to the tune of Rs 5.46 per litre in Delhi.
RK Singh, chairman, BPCL says in rupee terms, oil prices are still high. “We have cut prices only to the extent which is sustainable,” he says. He added that due to volatility in international crude oil prices, more stability needs to be seen there before they can consider another cut. Below is an edited transcript of his interview to CNBC-TV18. Watch the accompanying video for more. Q: Did you move quickly because crude prices just moved up a little bit over the last couple of days and you wanted to utilise the window of weakness before crude strengthens or Brent prices move up again?
A: The whole thing is so volatile, you have to wait and watch but what we found out that this much of cut which we have introduced yesterday is the one which is sustainable in this highly volatile situation. Another thing that needs to be understood is the fact that we pay the refiners the international prices of gasoline, not crude and gasoline does not necessarily move in tandem with crude. So gasoline price which came down to USD 94 per barrel has moved up to USD 97 per barrel.
The rupee exchange rate has also moved up and down. In such a volatile situation we did workout as to what is the level of credit that is sustainable which is what we have done. Nevertheless, we will continue to watch for some more time and if it continues to behave like what we have observed, then we have to take a call how much further cut if at all is required needs to be done. Right now this is the one which is sustainable. Q: What is the situation now in terms of over-recoveries on petrol? Do you have any still after the price cut and what has happened with the dollar-rupee?
A: It is very difficult to estimate the over-recovery based on one-two days course of crude or gasoline. Everyday there is a change. I cannot say anything about the over-recovery but with this cut, we still have no loss. If there was a loss, we would not have cut it but we are not losing with this price cut that we have done yesterday. If you talk about over-recovery, it is happening every moment; it is happening on a day-to-day basis. It is difficult to quantify the over-recovery per se.