May 2021 – PIP – Philippine Institute of Petroleum

WORLD OIL PRICES (April 19-23, 2021 trading days)

Dubai crude has increased week-on-week by almost US$1.00/bbl. Both MOPS gasoline and MOPS diesel have also increased: gasoline by around US$1.40 per barrel and diesel by nearly US$1.00 per barrel.

Reasons for the Adjustment

The sour crude market showed signs of cooling amid rising concerns over India’s worsening COVID-19 situation, as the country’s oil demand is hit by second wave of infections and restriction measures. However, second half recovery remains in sight amid widening vaccination rollout.
- S&P Global Platts Analytics has lowered India’s oil demand growth forecast to 400,000 b/d in 2021 (versus 440,000 b/d last month), with 2021 demand to remain below 2019 levels.
- The main reasons behind the mild downward revision were: 1) the government of India has no intention to repeat last year’s strict nationwide lockdown and 2) India reportedly has a substantial vaccine production capacity that allows it to administer 130 million shots so far, or about 10% of the total population.
- Thus, the availability of vaccines will likely lead the government to defer from tough suppression measures, which is positive for oil demand.
On supply above OPEC+, the US oil production level of 12.8 million b/d (MMB/D) in December 2019 is not expected to be achieved again before late-2023.
- The severe reduction in drilling and completion activity due to the pandemic coupled with capital discipline is requiring four years for production to reach pre-COVID-19 levels.
- Longer term production growth (beyond 2023) is dependent on several factors including global demand, well-level break-evens, capital discipline, and shale rock quality.
- Forecast is predicted at $49/b WTI (constant dollars); variations in prices will result in changes in predictions.&ZeroWidthSpace;
For gasoline in Asia, reports disclosed of strengthened gasoline market toward the end of the trading week with the increasing Dubai-gasoline crack spreads amid support for fundamentals from fresh buy tenders.
- Gasoline markets were sustained by fresh demand from Indonesia. Pertamina bought six parcels of 200,000 barrels each for delivery over May and June via tender while also seeking an additional 350,000 barrels of prompt deliveries for end-April/early-May.
- Prices showed no sign of COVID-related demand concerns from rising infection numbers in India and Japan.&ZeroWidthSpace;
Gasoil/diesel cracks inched higher despite the re-emergence of COVID-related demand fears. The Singapore gasoil vs. Dubai crack reached a seven-week high of $6.16 per barrel.
- The main concern centered on India, where daily COVID infections have surged to 300,000 cases, about 200% higher than the peak during 2020 that lead to overloaded health care system sand localized lockdowns in some areas.
- Indian gasoil demand had been on a strong recovery track, back to 1.73 MMB/D or 97% of 2019 levels in 1Q 2021. The second quarter is usually a strong period for agricultural gasoil demand, which should see a limited impact as lockdown measures are so far confined to cities.
- While the country’s gasoil demand is likely to deteriorate further from the 3% month-on-month decline in first half of April, the government is not repeating last year’s strict national-level lockdown. Thus, Platts Analytics conclude that a repeat of last year’s sharp demand contraction is not expected.&ZeroWidthSpace;

FOREX: Philippine peso appreciated week-on-week against the US dollar by P0.12 to P48.37 from P48.50 in previous week.

DOMESTIC OIL PRICES

Effective 27 April 2021, the oil companies implemented the price increase in domestic oil products. Gasoline has increased by P0.45 per liter, diesel by P0.35 per liter and kerosene by P0.65 per liter.

These resulted to the year-to-date adjustments to stand at total net increase of P7.60/liter for gasoline, P5.70/liter for diesel and P4.95/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