WORLD OIL PRICES (September 7- 11, 2020 trading days)
Dubai crude has decreased week-on-week by about US$4.50/bbl. Both MOPS gasoline and MOPS diesel have also decreased: gasoline by around US$3.35 per barrel and diesel by nearly US$ 5.00 per barrel.
Reasons for the Adjustment
- The US Energy Information Administration (EIA) stated in its monthly Short-Term Energy Outlook released this week that global oil demand grew by 1 million b/d (MMB/D) in August, the slowest month-on-month increase since demand started recovering from coronavirus lockdowns in May. Last month (August) global supply growth surpassed demand growth, the first time during the recovery period.
- The EIA cut its outlook for 2021 global oil demand growth by 500,000 b/d from last previous month forecast to 6.5 MMB/D on lower expected consumption growth in China. EIA now sees China demand growing 1 MMB/D next year, down from 1.5 MMB/D in last month’s forecast.
- Reportedly, OPEC 13 members produced 24.37 MMBD in August (a 4% rise from July) while its nine partners, including Russia, added 12.67 MMB/D (a 6% increase). The higher output was expected as the OPEC+ coalition had been scheduled to ease output to 7.7 MMB/D (from 9.7 MMB/D in June and July) for the rest of the year starting in August. The group achieved 97% compliance with its new quotas in the month, according to Platts calculations.
- However, OPEC’s increased production is coming at a time when the rapid recovery of global oil demand appears to be stalling, amid fears of a growing second wave of COVID-19 infections. Thus, Crude oil markets have softened markedly over the past week, with Dated Brent falling below $40/b for the first time since mid-June. In the sour crude market, Dubai times-spreads had been on an upward trend for the second half of August but have seen a sharp reversal over the past two weeks. The Dubai M1/M3 time-spread was at minus 73 cents/b on September 10.
- Asian gasoline weakens during the week (Sep 4-11) as supply concerns return, dragging on fundamentals of Asian gasoline time-spreads that slipped deeper into contango later in the week. However, Singapore gasoline cracks (crude vs. gasoline) are now above gasoil/diesel for the first time since 2017 and could see additional support with refinery maintenance set to rise heading into October, in addition to extended accident-related outages such as Taiwan’s Formosa and Malaysia’s Pengerang.
- The slump in Asian gasoil/diesel markets bottomed out, but with little sign of any recovery developing. The Singapore gasoil vs. Dubai crack was stable at $3.00/b, up moderately from last week lows. Market sentiment remains unpromising on a slowing demand recovery, high stock levels, and expectations of continued heavy exports from China though the rest of the year.
- Singapore middle distillate stocks fell by 6% week-on-week to 15.05 million barrels. But despite the drop, Platts noted that stock levels remain high by historical standards, as this week’s total is the second-highest since September 2016.
- A lack of European demand for gasoil will see more Middle Eastern and Indian volumes heading east to Southeast Asia, adding to the pressure on Singapore prices. With US Gulf Coast low sulfur gasoil stock at record highs and 66% higher year on year, it is difficult to see additional gasoil from the East of Suez moving to Europe even as the winter season approaches.1
1 Platts’ Asia Pacific Weekly Recap, 11 September 2020
FOREX: Philippine peso depreciated week-on-week against the US dollar by P0.05 to P48.60 from P48.55 in previous week.
Other recommended reference sites:
• http://www.aip.com.au/pricing;
• http://www.indexmundi.com/commodities/?commodity=crude-oil-dubai
• https://www.quandl.com/data/ODA/POILDUB_USD-Dubai-Crude-Oil-Price
DOMESTIC OIL PRICES
The oil companies implemented their price adjustments effective today, 15 September 2020. Gasoline has decreased of P1.00 per liter, diesel by P1.50-P1.55 per liter and kerosene by P1.45 per liter.
These resulted to the total year-to-date adjustments to stand at a net decrease of P5.22/liter for gasoline, P10.99/liter for diesel and P15.39/liter for kerosene.
For the updated prevailing retail pump price, please browse this link: https://www.doe.gov.ph/price-monitoring-charts?q=retail-pump-prices-metro-manila.
For more information, call the
Department of Energy
Pricing: 840-2187
LPG: 840-2130
Fuels: 840-5669
SMS: (0915) 4469421
Email: oilmonitor@doe.gov.ph
Website: https://www.doe.gov.ph