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Crude oil prices may stabilise at $26-27'

Our Bureau

MUMBAI, Dec. 8

THE declining trend in international crude prices, if sustained, is expected to improve refining margins of Indian refiners, particularly the private sector, and reduce the oil pool deficit.

Benchmark Brent crude prices fell 69 cents reaching a low of $26.87 per barrel. Brent crude fell below $30 per barrel from the November average of $32.35 per barrel.

Analysts and industry observers expect the prices to stabilise around $26-$27 per barrel. ``This will bring down the oil pool deficit in the long run,'' an oil company official said.

Reliance Petroleum Ltd may see its refining margins go up to $5-$5.5 per barrel against the past six month's average of $4 per barrel, according to analysts.

Public sector oil companies, Indian Oil Corporation, Bharat Petroleum Ltd and Hindustan Petroleum Ltd, may also see a marginal increase in refining margins to $2.5 per barrel from $2.

Market observers believe that the OPEC stepping up production has eased supply pressures in the international market, resulting in the fall in prices. ``Also, the winter-demand hype in the western markets has fizzled out aiding the fall,'' an analyst sai d.

For Indian PSU oil refiners, however, the improvement in refining margins may not be immediate. ``A large portion of the crude refined by us is domestic crude. Besides, unless the fall in crude prices coincides with a fall in product prices, it may not r eally affect our margins,'' a senior oil PSU official told Business Line.

A major portion of the crude processed by PSUs is currently purchased from ONGC at Rs 4,870 per tonne. The rest is procured through Indian Oil, the canalising agency. Private refiners such as RPL and Mangalore Refineries and Petrochemicals Ltd, however, buy directly from the international market and hence are more likely to be affected by the reduction in prices.