WORLD OIL PRICES (June 21-25, 2021 trading days)

Dubai crude has increased week-on-week by around US$1.00/bbl. MOPS gasoline and diesel have also increased by almost US$2.30 and US$0.95 per barrel, respectively.

Reasons for the Adjustment

• Prices of Oil climbed to their highest since October 2018 on expectations that demand growth will exceed supply, and OPEC+ will be careful in returning more crude to the market from August.
• The markets are in strong anticipation for the OPEC+ to meet on July 1 to discuss the further easing of their output cuts starting August. Most analysts feel the producer group has ample space to boost supply without disrupting the drawdown in oil stocks, given the greatly improved demand outlook.
  • The key factors OPEC+ reportedly consider are the strong demand growth in the US, Europe, and China, bolstered by vaccine rollouts and reopening economies.
  • Reports disclosed that OPEC+ is currently holding crude production at 6.2 million b/d (MMB/D), below October 2018 levels and intends to taper this output cut to 5.76 MMB/D in July.
• The prospect on the lifting of Iran sanctions, which was expected to add up supply to the market has dimmed, reportedly due to issues in relation to Tehran’s compliance with the 2015 nuclear deal.
• Crude oil futures settled higher as the market eyed increasingly bullish supply and demand outlooks despite the rapidly spreading coronavirus delta variant.
• Demand recovery, buoyed by the decline in the number of COVID -19 cases and an uptick in vaccination, has boosted the market’s ability to absorb additional supplies.
  • Market analysts noted that even with the increased output, the oil market could remain tight in the near-term owing to the increased travel and strong economic growth in the US and Europe.
• The Asian gasoline market ended the week slightly firmer, lifted by a stronger US- RBOB crack¹, which went on to record a 10 -session high during Asian trade hours.
  • The US stock draw comes as total product supplied for gasoline climbed to a four-week-high 9.44 MMB/D, testing highs last seen in February 2020 prior to the first wave of pandemic lockdowns.
  • Gasoline cracks also moved upwards with ongoing refinery outages that are expected to impact gasoline. 
• Asian gasoil/diesel market fundamentals were largely unchanged, with participants continuing to evaluate the demand-supply situation.
  • The Asian gasoil complex was largely steady from the previous session amid an absence of fresh price signals after a rough trajectory earlier in the week saw the front month structure flip from backwardation ² to contango³.
  • Some participants foresee a bullish market on hopes that narrowing supply balances would inject some strength, while others anticipate the market values reflecting the lackluster demand in the region.

¹ Crack – is an industry term for breaking apart crude oil into the component products, including gases like propane, heating fuel, gasoline, light distillates, like jet fuel, intermediate distillates, like diesel fuel, and heavy distillates, like grease.
² Backwardation – is when the current price, or spot price, of an underlying asset is higher than prices trading inthe futures market.
³ Contango is a situation where the futures price of a commodity is higher than the spot price.

FOREX: Philippine peso depreciated week-on-week against the US dollar by P0.57 to P48.71 from P48.13 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

Effective 29 June 2021, the oil companies implemented a price increase in domestic oil products. Gasoline has increased by P1.00 per liter, P0.65 per liter for diesel and P0.70 per liter for kerosene.
These resulted to the year-to-date adjustments to stand at a total net increase of P11.75/liter for gasoline, P9.90/liter for diesel and P8.40/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