Oil prices

The sharp increase in the bill has come amidst a V-shaped economic recovery following rising demand after the second wave of Covid coupled with a spike in global oil prices. However, this may pose a greater challenge for the government in FY22 to maintain fiscal discipline amid good growth in tax revenue.

The ongoing energy crisis has prompted a switch to oil, and therefore global oil demand is set to rise by 5.5 million barrels per day (mb/d) in 2021 and 3.3 mb/d in 2022, IEA said in its monthly Oil Market Report published on Thursday. Global oil demand is expected to reach 96.3 mb/d in 2021 and 99.6 mb/d in 2022, IEA's revised estimate shows.

"Necessary policy intervention by Central government with reference to duty reduction is proving to be beneficial for the general consumers," the government said in a release. "International prices of Soyabean oil, Sunflower oil, Crude Palm oil and RBD Palmolein increased by 1.85 per cent, 3.15 per cent, 8.44 per cent and 10.92 per cent respectively over the month.

Globally, Asian shares rose led mainly by Chinese tech shares which tracked a rally on Wall Street after signs of progress on resolving the standoff in the Congress over debt ceiling. Similarly, European stocks also rebounded. Sector wise, realty, consumer durables and auto indices gained the most whereas oil and gas and telecom were the two indices that ended in the negative.

At around 11.20 a.m., shares of the Oil and Natural Gas Corporation (ONGC) jumped 7.22 per cent to Rs 158.25 on the BSE while that of Oil India Ltd (OIL) gained 1.92 per cent to reach Rs 246.30. Indian Oil Corporation shares were up 2.89 per cent to Rs 129.90 while privatisation- bound Bharat Petroleum Corporation shares also witnessed a jump rising 1.09 per cent to Rs 440.45. Hindustan Petroleum Corporation also saw its shares rising 1.77 per cent to Rs 307.90.

As per an assessment of the gas market done by Kotak Institutional Equities (KIE), domestic gas price are expected to more than double to $6.6-7.6/million BTU in 1HFY23E from the current level of $3.2/million BTU available during 2HFY22.

Accordingly, the brokerage house's report, cited that Brent crude price which is currently at more than $75 per bbl has been driven by recovery in global demand with opening up of economies. "The US was hit by Hurricane Ida in July end, which has resulted in disruption of production from Gulf of Mexico (GoM) of 1.7mb per day in August.

Beside this, higher crude oil prices impacted investors' sentiments. Initially, both the key indices had a gap-down opening. They remained rangebound till mid-afternoon after which buying was triggered. However, after filling the opening down gap they soon ran into selling pressure and dipped back into the negative zone.

Currently, the November contract of Brent crude futures on the Intercontinental Exchange is trading at $72.50 per barrel, higher by 1.47 per cent from its previous close. Similarly, the October contract of WTI crude on the New York Mercantile Exchange (NYMEX) was trading at $69.13 per barrel, higher by 1.45 per cent from its previous close.

At the current prevailing high fuel price levels in the country, the marketing margin taken by the oil marketing companies (OMCs) on the retail sales of petrol and diesel has touched a high of around Rs 3 per liter.