Jump in ATF price by 50% and LPG by Rs 11.5 per cylinder brings more volatility in the market

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On Wednesday, Aviation turbine fuel (ATF) was hiked by 50% or Rs 12,126.75 per kilolitre (kl), to Rs 33,575.37 a kl (from Rs 21,448.62 a kl in May) and that of non-subsidies cooking gas LPG by Rs 11.5 per cylinder, a refill in Delhi will now cost Rs 593 per cylinder following a rise in international rates. But the petrol, diesel prices continued to remain on freeze for a record 78th day.

Senior Hindustan Petroleum Corporation executive said “A major reason for the hike is the rise in ATF prices in the international oil market. The domestic ATF price is calculated based on a formula. It was on a declining trend, since February”. In Mumbai, ATF price was seen at Rs 38,543.48 a kl, while in Kolkata, it was Rs 33,070.56 per kl. 

On the 1st and 16th of every month, ATF prices are revised. While LPG rates are changed once a month. In the process of reductions, the price of non-subsidized cooking gas has been cut by Rs 277 per 14.2-kg cylinder third time. Petrol and diesel prices are revised daily. Since September 2019, this is the fifth straight monthly rise in cooking gas prices. Whereas non-subsidized cooking gas prices have gone up by Rs 139.50 per cylinder in the last five months.

While oil PSUs have regularly revised ATF and LPG prices, since March 16 they have kept petrol and diesel prices on hold. Delhi has been declared kerosene-free and no PDS kerosene is sold in the national capital.

Between mid-March to May 25 because of the lockdown, no airlines operated, yet oil companies have continued to revise jet fuel prices downward. Not only the prices but coronavirus has made an impact on the Social Business intelligence market as well.

However, market analysts said due to the current pandemic situation, volatility in the stock market influenced volatility in ATF prices as well, but that has not stopped oil companies from passing on the reduction to airlines first, and hence the rise in rates.

A day after the final phase of polling for the Lok Sabha elections ended, the rates began to rise.