January 2021 – PIP – Philippine Institute of Petroleum

WORLD OIL PRICES (January 18-22, 2021 trading days)

Dubai crude has decreased week-on-week by almost US$0.50/bbl. Both MOPS gasoline and MOPS diesel have also decreased: gasoline by about US$0.65 per barrel and diesel by around US$0.30 per barrel.

Reasons for the Adjustment

With weak oil demand in Europe and the US, market analysts fear of renewed lockdowns in China could further weaken the demand outlook for oil and oil products.
- A new outbreak of coronavirus in some Chinese cities has sparked fears that the country could experience another wave of the pandemic.
- Chinese authorities have imposed mobility restrictions in affected cities, including Beijing, and have called on citizens to refrain from travel during the upcoming Lunar New Year holiday.
- Thus, China’s oil demand to see a sharp month-on-month decline of 1.3 million b/d in February.

On the other hand, Algerian Energy Minister Abdelmadjid Attar said that global vaccination campaigns and the resumption of international air traffic will support oil prices within $55-$60/b in the near term, but OPEC will be closely watching for clearer signals from new US President Joe Biden on whether he will ease sanctions on Iran and Venezuela.
- Any relief in the sanctions could unleash crude volumes that would complicate the producer bloc’s efforts to rebalance the market amid a still fragile global recovery from the coronavirus pandemic.

Sentiment around gasoline demand is unpromising with COVID-19 infections and associated measures are trending upwards in Indonesia, Malaysia, Japan, and China.
- Asia’s largest gasoline importer Indonesia is expected to import around 8 million barrels of gasoline in February as local demand was seen to have steady recovery through to the end of 2020.
- But with daily infections recently surging to the highest on record, the government has been pushed into new lockdown measures covering Jakarta, the rest of Java, and Bali. Hence, the outlook for Indonesian demand remains uncertain in the near term.
The diesel market outlook appears more uncertain, with some sources saying that the sentiment could turn more bearish ahead of expectations of a slowdown in activity across large parts of the region ahead of the Lunar New Year holidays. The situation may further be compounded by still healthy gasoil export flows from China over February.
- The conditions of low refinery runs, depressed demand, and closed arbitrage to Europe has left markets unresponsive to recent cold weather, which would traditionally be a positive driver for gasoil values (it being used as heating fuel).
- Regional balances could begin to tighten when spring refinery maintenance season begin to kick in. Some refiners may opt to start turnaround earlier because of current weak margins and demand.

FOREX: Philippine peso appreciated week-on-week against the US dollar by P0.01 to P48.06 from P48.07 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 decrease effective today, 26 January 2021, i.e. gasoline by P0.15 per liter and P0.10 per liter decreased both for diesel and kerosene.

These resulted to the year-to-date adjustments to stand at a net increase of P2.15/liter for gasoline, P1.55/liter for diesel and P1.50/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

Source: DOE Website

WORLD OIL PRICES (January 4-8, 2021 trading days)

Dubai crude has increased week-on-week by around US$2.00/bbl. MOPS gasolineand MOPs diesel have also increased: gasoline by about US$2.60 per barrel and diesel by nearly US$0.90 per barrel.

Reasons for the Adjustment

Saudi Arabia and its OPEC+ partners jolted prices higher on Jan. 5 by adjusting February and March production plans well below market (and Platts Analytics’) expectations.
- Platts Analytics initial analysis indicates OPEC+ forecast will be reduced by over 1.5 million b/d (MMB/D) in February-March, with the overwhelming majority of the revision coming from Saudi Arabia.
- Saudi Arabia’s clear determination to support short-term markets through an additional 1MMB/D cut, with Brent already above $50/b, far outweighs Russian reluctance to even freeze output for now.

Following the OPEC+ announcement, Saudi Aramco announced its official selling prices (OSPs) to Asia for February-loadings; prices to Asia were increased as expected, by between 20-70 cents/b.
- This likely reflects the impact of the additional production cuts, the bulk of which will likely come at the expense of supply to Asia, which account for over 70% of Saudi exports.
- Asian buyers have responded rapidly to the Saudi actions, with spot prices for alternative Russia and Middle Eastern grades rising. The Dubai spread jumped to an 11-month high, reflecting the broad strength in the Asian-focused sour crude market.

An overnight crude price rally extended in mid-day US trading Jan. 8 as expectations of robust stimulus spending from the incoming Biden administration offset a weaker-than-expected US jobs report.
- According to media reports US President-elect Joe Biden said his administration’s stimulus package would be in the trillions of dollars.

Markets were also still riding a wave of optimism sparked by tightened crude supply outlooks.
- Data released by the US-EIA showed a sizable 8.01 million-barrel draw on US crude stocks for the week ending Jan. 1. The larger-than-expected draw came after Saudi Arabia announced at the end of the meeting of its voluntary slashing February and March crude production by 1 MMB/D.

The Asian gasoline market stayed firm at the end of the trading week Jan. 8, with another fresh bout of support from the West keeping crack spreads steady.
- The uptick came after supportive news emerged on the international oilmarket front, with Saudi Arabia’s announcement.
- This 1 MMB/D decline in production would more than compensate for the combined 75,000 b/d increase granted to Russia and Kazakhstan in February and March during the meeting, especially since all other members are expected to hold their production steady.

For gasoil/diesel, Platts report on Jan. 6 stated that European demand was set to remain depressed over the next few months, with new announcements of lockdowns and extensions to existing restrictions heaping bearish sentiment on the European gasoil complex.
- Demand concerns in Europe have returned to center stage as tightening movement restrictions were set to hamper fresh requirements. England, on Jan. 5, entered its most stringent nationwide lockdown since March in a bid to curb surging coronavirus infections, including a new highly transmissible strain that is threatening to choke the country’s healthcare system, while Germany is likely to extend its lockdown until the end of January.
- On the other hand, the Asian gasoil market has been supported by consistent demand from Australia as well as pockets of demand from Southeast Asia, thus helping the Asian gasoil market to remain relatively steady.

FOREX: Philippine peso depreciated week-on-week against the US dollar by P0.02 to P48.05 from P48.03 in previous week.

DOMESTIC OIL PRICES

The oil companies implemented their price increase effective today, 12 January 2021, i.e. gasoline by P0.85 per liter, diesel by P0.30 per liter and kerosene by P0.25 per liter.

These resulted to the year-to-date adjustments to stand at a net increase of P1.30/liter for gasoline, P0.60/liter for diesel and P0.65/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