WORLD OIL PRICES (March 22-26, 2021 trading days)

Dubai crude has decreased week-on-week by about US$3.50/bbl. Both MOPS gasoline and MOPS diesel have also decreased by around US$4.40 and US$4.10 per barrel, respectively.

Reasons for the Adjustment

• Market analysts see crude prices bottoming out following the sharp increases in the past two weeks, where Dubai crude posted a four-week low of $61/bbl on March 23 but rebounded to above $62/bbl at the end of the week. The market eyed an extended disruption in the Suez Canal and the likelihood that OPEC would hold back supply amid pandemic-weakened demand outlooks affected these increases.
  • A slower-than-expected demand recovery in the first half of 2021 is likely to be offset by an extended runway for OPEC+ supply cuts, US investment bank Goldman Sachs said March 26.

• The Suez Canal remained partly blocked by a lodged container vessel, extended into a fourth day – Friday.
  • Reports said over 60 tankers of crude, product, and LPG are currently waiting on both sides of the passage.
  • From West to East, oil flows are primarily of low-sulfur residual fuel, crude, naphtha, and LPG, while from East to West, movements are mainly of crude and middle distillates. Platts Analytics estimated the two-way crude and product flows through the canal at between 4-5 million b/d in recent months.
  • For Asia, flows of crude from the North Sea and Caspian regions could be disrupted, though the impact may be muted amid deteriorating economics for crude arbitrage. Key crude producers like Saudi Arabia, Russia, Iraq, the UAE, Azerbaijan, Kazakhstan, Norway, Kuwait, Libya, and Algeria rely on Suez Canal to export their crude to both Eastern and Western customers.
  • Refined product trade will also be impacted. The inability to move surplus volumes of gasoil to Europe could push additional Indian and Middle Eastern volumes towards Southeast Asia.

• The Asian gasoline market weakened slightly at the end of the trading week, as an expected influx of cargoes from North Asia combined with a pullback in the US Gasoline-Brent crack weighed on product-crude spreads.
  • Notwithstanding the increasing supply however, evidence of demand recovery in Asia emerged as gasoline outflows from Singapore over March 18-24 jumped sharply by 46% week on week to 716,473 MT, per Enterprise Singapore data of March 25.
  • Indonesia, the biggest importer of gasoline in Asia, is expected to import between 8-9 million barrels of gasoline in April, with Ramadan set to begin mid-month. While the volume is relatively lower compared to 12.3 million barrels during Ramadan time in 2019, it is greater than in May 2020 when imports slumped to 5.9 million barrels at the height of the pandemic.
    • The lingering COVID-19 problems are seen keeping demand below normal.

• The Asian gasoil/diesel market continued to edge lower March 26, with some market participants saying that intermonth spreads were weakening amid growing supply in the region at largely steady demand.
  • China’s gasoil exports in March were expected to rise to 2.29 million MT, an 11-month high, and could reach 2.6 million MT per S&P Global Platts report..
  • The East-West gasoil Exchange of Futures for Swaps (EFS)(1) fell from a one-month high last week to minus $3.13/MT. Conventional East-West gasoil arbitrage economics(2) remain unworkable on paper, but the extreme weakness of VLCC rates has made shipments on new build crude tankers viable.
  • The blockage at the Suez Canal could potentially add further pressure on East of Suez gasoil values by restricting or delaying European-bound cargoes, depending on how long the disruptions drag on.

FOREX:  The value of Philippine peso against the US dollar remains at P48.61, same as 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

Effective 28-30 March 2021, the oil companies implemented the price decrease in domestic oil products. Gasoline has decreased by P1.20 per liter, diesel by P1.30 per liter and kerosene by P1.35-P1.40 per liter.

These resulted to the year-to-date adjustments to stand at total net increase of P6.15/liter for gasoline, P4.60/liter for diesel and P3.50/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.

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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

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(1) EFS is a transaction negotiated privately in which a futures contract for a physical item is exchanged for a cash settled contract.
(2) It is the simultaneous purchase and sale of the same asset in different markets in order to profit from tiny differences in the asset listed price.