Here's why petrol, diesel prices may fall further

Your petrol and diesel bills could fall further if oil prices continue to trade at or below current levels.

Oil marketing companies (OMCs) on Friday cut petrol and diesel rates by more than Rs 1 each, tracking international oil rates and rupee movement. On Friday, brent crude oil price traded at $49.03 per barrel.

On Monday, brent crude prices were hovering around $49.02 per barrel, down 0.35 per cent from the previous close. Brent crude oil price has fallen almost 14 per cent during the last one month.

State-owned fuel retailers IOC, Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL) revise petrol and diesel prices on 1st and 16th of every month based on average imported cost and rupee-dollar exchange rate in the previous fortnight.

If oil prices hover near the current level and rupee which hit its two-year low at Rs 65.32 manages a strong comeback by September 1, one can expect OMCs to cut price of diesel and petrol further.

Citigroup has also lowered its crude oil price outlook citing weak market fundamentals, including an increased supply from OPEC and challenging demand growth in China and emerging markets.

According to the government's Policy Planning and Analysis Cell, India's crude oil import bill is estimated to come down to $88.20 billion in 2015-16, down about 22% from $112.70 billion in 2014-15.

India meets approximatley 80 per cent of the domestic oil needs from imports and crude oil bill forms around 21 per cent of the domestic oil needs.