"Rupee has appreciated to Rs. 60.50 to a US dollar from Rs. 61.44 and simultaneously international gasoline rates have dipped from $118.09 per barrel to $115.73," a source with direct knowledge of the development said.
"The twin factors will lead to a reduction in petrol price on Monday," the source added. Diesel rates, however, will go up by 50 paisa per litre.
The government had, in June 2010, given oil firms freedom to fix petrol prices on the 1st and 16th of every month based on average global oil prices and foreign exchange rates in the preceding fortnight.
It had in January 2013 authorised oil firms to hike diesel prices by 40-50 paise per litre every month till such time that the losses on the fuel are wiped out. Diesel prices have risen on 14 occasions since then.
Diesel rates, however, will go up by 50 paisa per litre
Election Commissioner H S Brahma, who had earlier this month stated that government cannot discontinue the monthly increases in diesel prices as it would tantamount to populism, said on Wednesday that oil companies can revise petrol prices in line with the practice they have been following since June 2010.
Oil companies can revise petrol prices without coming to the Election Commission, he said.
Fuel prices were last revised on March 1 when petrol price was increased by 60 paise a litre while diesel was made costlier by 50 paise.
At present, petrol costs Rs. 73.16 a litre in Delhi while diesel is priced at Rs. 55.48.
Since January 2013, diesel rates have risen by a cumulative Rs. 8.33.
At present, oil firms lose Rs. 7.16 on sale of every litre of diesel but the losses will come down significantly on back of softening international oil rates and rupee appreciation.
On the strength of softening oil rates and rupee appreciation, Oil Minister M Veerappa Moily has informed Prime Minister Manmohan Singh that there is no likelyhood of a hike in petrol prices during the next two months when the ruling Congress party faces a tough general election.
Sources said he has, however, stated that it is not possible to reverse the Janaury 2013 decision of the Cabinet Committee on Political Affairs (CCPA).
If the government were to decide on halting the monthly diesel price increases, an approval of the Election Commission will be required, he told the Prime Minister.
Elections to elect a new government at the Centre will begin on April 7 and end on May 12.
"If they (oil companies) are going (for petrol price revision) under the market driven force, so they are welcome. I mean there are a certain area, where market takes the precedence," Mr Brahma told reporters on the sidelines of a CII event in New Delhi.
He said the Election Commission will not interfere if the oil companies operate under the stated policy.
"Let them do their job properly. That's all. We are here only to ensure that everybody does their job. Election Commission will do their job. RBI will do their job. Petroleum ministry and oil companies will do their job. Decision is very simple and clear."
(With agency inputs)