Petrol in Delhi would cost Rs 67.24 a litre from midnight tonight, down 95 paise from Rs 68.19 a litre.

Prices vary from city to city due to differential local sales tax or VAT rates.

The last reduction in petrol price before this was the 56-paise cut to Rs 67.90 a litre on October 9.

Thereafter, the rate was hiked by 29 paise following government decision to raise the commission paid to petrol pump dealers.

"Presently, the international oil prices are relatively stable," a statement by Indian Oil Corp, the nation's largest fuel retailer, said.

Petrol price in Mumbai has been reduced by Rs 1.20 per litre to Rs 73.53, while it will cost Rs 70.57 a litre in Chennai from tomorrow instead of Rs 71.77 a litre currently. In Kolkata, the price has been cut by Rs 1.19 to Rs 74.55 per litre.

Global gasoline rates (against which the domestic price of petrol is benchmarked) have come down, but the rupee value against the US dollar remains volatile.

"There has been significant volatility in the Indian rupee-USD exchange rate and is currently very weak with uncertainty about its future direction," IOC said. "The trends in the international oil market and Indian rupee-USD exchange rate are being closely monitored and the same shall be reflected in future price changes."

The government had in June 2010 deregulated petrol prices giving oil companies freedom to fix rates in line with the cost. However, prices have seldom moved in line with cost and oil companies buckled under political pressure to keep rates checked to help the government manage inflation.

IOC and other state retailers, Hindustan Petroleum and Bharat Petroleum, lost over Rs 2,000 crore on selling petrol below cost during the first six months of current fiscal. And since the product is deregulated, there will be no subsidy support from the budget to cover these losses.

"It may be noted that oil marketing companies are bearing the burden of a loss of over Rs 2,000 crore on sale of petrol during April-September 2012 due to inability to change retail selling prices to the desired extent in line with market conditions," IOC said.

Besides petrol, fuel retailers sell diesel, domestic LPG and kerosene at heavy losses.

IOC said oil firms were losing Rs 9.84 a litre on diesel, Rs 31.30 a litre on kerosene sold through PDS and Rs 478.50 per 14.2-kg cooking gas cylinder supplied to households.