May 2023 – PIP – Philippine Institute of Petroleum

WORLD OIL PRICES (May 1-5, 2023, trading days)

The week-on-week price of Dubai crude has decreased by around $5.50/bbl. MOPS prices of gasoline, diesel and kerosene have also decreased per barrel by about $6.00, $6.80, and $5.70, respectively, during the reference week.

Reasons for the Price Adjustment¹

The week’s adjustment in oil prices was largely driven by microeconomic concerns from the world’s two largest economies, i.e., the following:

a) US

The US Fed raised interest rates by another 0.25 percentage points to 5.00%-5.25%, which was widely expected. Further, while the European Central Bank decided on Thursday to slow interest rate hikes, it kept its options open on future moves as it fights stubbornly high euro zone inflation.
Barclay analyst says “The U.S. economy continues to evolve in a manner consistent with a recession commencing later this year. The manufacturing sector is contracting, consumer is struggling, there are broadening signs of cracks emerging within the labor market.”

b) China

In China, the NBS manufacturing PMI showed a surprise contraction in April, falling to 49.2 after three straight months of growth since January; the Caixin China General Manufacturing Purchasing Managers’ Index fell to 49.5in April, from 50.0 in March.
On a positive note, transport normalization will be one pillar to support China’s oil demand growth in 2023. Data from China’s Ministry of Culture and Tourism estimated a total of 274 million domestic tourist trips were made during the week-long 2023 Labor Day holidays which ended May 3. This marked a strong 70.8% year-on-year increase and a 119.1% recovery from pre-pandemic levels.
However, the increased number is mainly reflected in domestic travel, and railway transport will divert part of oil demand. The downside risks of oil demand growth remain in international flight recovery, infrastructure expansion, real estate, trading activities and manufacturing. Platts Analytics anticipate China’s total oil demand to recover gradually from Q2 with annual demand expected to reach 15.8 million b/din 2023, 6% higher than that in 2022.

Asian gasoline crack dropped due to waning import demand from Malaysia and Indonesia amid expectations that China will likely issue additional product export quotas.

Asian gasoil crack extended losses among mixed picture of demand recovery, eroding arbitrage economics, anticipation of a second batch of product export quotas from China and a narrowing East-West EFS.

S&P Global Commodity Insights estimates China’s gasoil demand declined slightly to 4 million b/d in March, down by 0.2% on month. India’s gasoil demand remained strong in March due to favorable warm weather and increased industrial and agricultural activity.

In the US, EIA data showed US total gasoline inventories rose by 1.742 million barrels to 222.878 million barrels in the week ended April28, down 2.5% on year. Meanwhile, total US gasoline supplied, a proxy for gasoline demand, fell 893,000 barrels over the same period to 8.618 million barrels.

FOREX: The week-on-week average of Philippine peso appreciated versus the US dollar by P0.37 to P55.30 from P56.67 in previous week.

DOMESTIC OIL PRICES

Effective 09 May 2023, the oil companies implemented a per liter decrease of P2.20 for gasoline, P2.70 for diesel and P2.55 for Kerosene.

These resulted to a year-to-date net decrease for diesel at P7.05/liter and kerosene at P7.50/liter. Gasoline on the other hand, has a net increase of P3.85/liter.

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
Website: https://www.doe.gov.ph

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¹ Asia-Pacific Weekly Recap 05 May 2023 by S&P Global Platts Analytics

Present during the meeting are members of the PIP WISE Committee and MTSC officers, namely (from left to right): 1st row- MTSC President and Director Capt. Ebenezer G. Tañada, Jr., Capt. Leo Soriano (Shell), Engr. Marvin Dela Fuente (Isla LPG), MTSC Chief Finance Officer Randy Gampong; 2nd row – Ms. Nimfa Villamayor (PIP), Engr. John Willer Salle (Petron), Engr. Gian Carlo (Petron), Engr. Chito Barba (Petron), Engr. Jose Solomon (PTT), Engr. Ed Villena (Chevron), Ms. Dessa Diasanta (Chevron), Engr. Reymond Dimitui (PTT), Engr. Eladio Ablaza III (Total), and PIP Executive Director Raffy Capinpin.

PIP WISE PHILIPPINES AND MUTUAL AID AGREEMENT. The Philippine Institute of Petroleum (PIP) member companies recently renewed and strengthened its Waterborne Industry Oil Spill Equipment (WISE) Memorandum of Agreement (MOA) with Malayan Towage and Salvage Corporation (MTSC) to another 5 years until 2028.

The WISE Memorandum of Agreement among PIP member companies was first initiated by PIP’s Health Safety Environment (HSE) & Marine Committee in 2009 essentially to contract a reputable Tier 2 Oil Spill Response Organization (OSRO) in the Philippines, founded on the basic principles of PIP of creating a venue for the sharing, preservation and refinement of best practices in the field of Quality, Security, Safety, Health & Environment.

The specific objectives of PIP’s WISE Memorandum of Agreement includes the following:

Establish a cooperative solution to address the environmental impact of an oil spill that may be brought by any unfavorable incident in the water borne supply operations of the members of PIP.
To contract a credible in-country oil spill response service provider to respond in the event of an oil spill (Tier II) incident in the Philippines on 24/7 “on-call” (Philippine-wide Coverage).
To maintain a stockpile of Oil Spill Equipment, Tugs & Spill Response Boats & other equipment, strategically located in various Ports of operation of the members of PIP. Oil Industry.
To undertake at least 3 oil spill response drills per year (desktop or actual) where PIP members and MTSC can test its readiness and develop best practices in responding to oil spills.

The PIP member companies include: Chevron Philippines, Inc., Isla LPG Corporation, Petron Corporation, PTT Philippines Corporation, Pilipinas Shell Petroleum Corporation, and Total Energies.