Even after the fresh reduction, there exists a scope for cutting rates by a further Re1 per litre as current revision was done at average international oil rate in the first fortnight of June

New Delhi: In a relief to inflation-battered common man, petrol price was cut by Rs2.46 per litre on Thursday, the second reduction this month, reports PTI.

Petrol price in Delhi will cost Rs67.78 per litre with effect from midnight Thursday as compared to Rs70.24 a litre rate now, state-owned oil companies announced.

The reduction in rates follows a Rs2.02 a litre cut in prices from 3rd June. The two price cuts have wiped out more than half of the massive Rs7.54 per litre increase in rates, the biggest in the history which was effected last month.

Even after the fresh reduction, there exists a scope for cutting rates by a further Re1 per litre as current revision was done at average international oil rate in the first fortnight of June. Global oil prices have fallen by 8% since then.

In Mumbai, petrol price has been cut by Rs3.10 to Rs73.35 per litre, while it will cost Rs72.74 a litre in Kolkata from Friday compared to Rs75.81 per litre currently. Chennai saw a Rs3.07 per litre cut in price to Rs72.74 a litre.

State-owned oil firms abandoned the practice of revising rates of petrol on 1st and 16th of every month and from now on will now do so on a random date so as to deter petrol pump dealers building positions.

Petrol pumps at some places run dry as owners stop taking supplies from companies if a reduction in price is anticipated. Similarly, if an increase in rate is expected, pump dealers start hoarding supplies.

Indian Oil Corporation (IOC), the nation's largest fuel retailer, said the three oil firms are projected to lose a record Rs1,51,000 crore in revenue on sale of diesel, domestic LPG and kerosene, whose rates have not been revised in past one year.

Oil firms, IOC said, continue to closely monitor the international oil prices and the evolving scenario in rupee-dollar exchange rates to assess their potential impact on selling prices in future.

"It may be noted that prevailing global economic conditions have had an adverse impact on world petrol demand resulting in petrol margins over crude oil prices dipping to unsustainable lows. Therefore, price differential of crude and petrol shall also be under a close watch in the coming days," it said.

Sources said the gasoline cracks or the difference between cost of raw material (crude oil) and the price of product (petrol) had narrowed to just $3 per barrel. In comparison, cracks for diesel were as high as $12-$13 a barrel.

With such narrow spread, any upward movement in crude oil price or devaluation of rupee would force an increase in price in near future, if the rates were to be cut now.