Source: DOE Website

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

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.

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

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