pip_admin – Page 5 – PIP – Philippine Institute of Petroleum

Posted on: March 31, 2021 by pip_admin

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.

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.

_______

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

_______

(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.

Posted on: March 15, 2021 by pip_admin

Source: DOE Website

WORLD OIL PRICES (March 1-5, 2021 trading days)

Dubai crude has decreased week-on-week by almost US$0.20/bbl. Both MOPS gasoline and MOPS diesel have also decreased: gasoline by around US$0.25 per barrel and diesel by nearly US$1.30 per barrel.

Reasons for the Adjustment

Saudi Arabia and OPEC+ alliance announced a rollover of production cuts after its meeting on March 4, contrary to market expectations of easing output cuts amid steady global demand recovery. The announcement, sparked bullish sentiment in the Middle East crude markets.

The OPEC+ alliance, which controls about half of the world’s production capacity, will mostly maintain its quotas, with Russia allowed a 130,000 b/d increase and Kazakhstan a 20,000 b/d rise, while Saudi Arabia said it would continue implementing its 1 million b/d (MMB/D) voluntary cut.
- It means the group will keep about 8 MMB/D of crude production, or roughly 8% of pre-pandemic supply, off the market for another month.
- Economic uncertainty prompted the producer group to maintain its cuts instead of unleashing production, with many potential pitfalls ahead, including an uneven vaccine rollout and stringent lockdown measures that are a damper on oil demand.
- The OPEC+ decision to keep back April supply will clearly trigger tighter markets, as April loaders will be needed for increased summer refinery runs.
- The alliance will meet next April 1 to decide on May output levels.

Platts Analytics forecast global oil demand to grow by 250,000 b/d in April over March, before surging 1.9 MMB/D higher in May and another 3.3 MMB/D in June.

Gasoline in Asia softhened as cargoes were being spotted flowing out of Asia.
- Industry sources have noted the opening of the arbitrage route for gasoline cargoes to be shipped to West Africa, as the East-West spread(1) dropped sharply since the Winter Storm Uri in late-February; thus had sharply strengthened the West gasoline complex.
- Also, Japan’s largest refiner ENEOS said that it only intends to restart its 145,000 b/d Sendai refinery in northeast Japan in the first half of April, which had previously been suspended due to the strong earthquake offshore Fukushima late Feb. 13.

Analysts see the narrowing day-by-day of the backwardation(2) in the gasoil (diesel) complex, resulting to growing supply length in the Asian gasoil market that is weighing on market sentiment.
- Higher gasoil exports from China over March was seen to have partly attributed to the gasoil market softening as Chinese refineries are reportedly planning to boost gasoil exports in March to about 2.3 million MT in a bid to offset inventory pressure.
  - Gasoil stock levels in china were notably high due to high throughput in February and weak consumption over the Lunar New Year period.
  - The four key state-owned oil refineries’ utilization was at a sevenmonth high of 82.8% in February while private refineries kept their runs stable from January.
  - The country’s COVID-19 control measures also led to lower consumption and higher exports.

FOREX: Philippine peso appreciated week-on-week against the US dollar by P0.06 to P48.58 from P48.64 in previous week.

DOMESTIC OIL PRICES

The oil companies implemented the price decrease effective today, 09 March 2021. Gasoline has decreased by P0.10 per liter, P0.35 per liter for diesel and kerosene by P0.55 per liter.

These resulted to the year-to-date adjustments to stand at a net increase of P6.10/liter for gasoline, P5.35/liter for diesel and P4.50/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.

_______

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

_______

1 East-West spread is the measure between European and Asian gasoline prices
2 Backwardation – is when the futures price is below the expected future spot price

Posted on: February 17, 2021 by pip_admin

Source: DOE Website

WORLD OIL PRICES (February 8-12, 2021 trading days)

Dubai crude has increased week-on-week by almost US$3.00/bbl. Both MOPS gasoline and MOPS diesel have also increased by around US$2.30 and US$3.70 per barrel, respectively.

Reasons for the Adjustment

The International Energy Agency (IEA) in its Feb. 11 Oil Market Report pointed to a tightening oil market this year, despite lowering its estimate of the recovery in global oil demand and seeing improving non-OPEC supply growth.
- The IEA predicts global oil demand will grow by 5.4 million b/d (MMB/D) in 2021 to reach 96.4 MMB/D, noting this would be around 60% of the volume lost to the pandemic in 2020.
- This is the fourth straight month the IEA has lowered its demand outlook given the challenges the world has, brought about by COVID-19. IEA however could see optimism in the second half of the year.

On prices, crude oil edged higher with investors expecting stronger demand for oil in Q2 amid the accelerating global vaccination program while compliance with agreed OPEC+ production cuts seemed to be holding..
- Some analysts thought $60/bbl level could not be reached until a couple years down the road, but “the key whether the crude price rally continues is if we don’t see a spike in COVID-19 cases and as restrictive measures are eased” a market analyst noted.
- But according to Platts Analytics, energy producers remain skeptical of the recent uptrend in crude prices, with retail investors also expecting prices to correct downward in the near term.

For gasoline, while prices reached about US$65/bbl early in the week, the Asian gasoline market softened as the week ended, ahead of the Lunar New Year holidays. Reports disclosed signs of weakening fundamentals as well as a retreat in the US gasoline-Brent crack exerted downside pressure on the motor fuel complex.
- The weaker fundamentals were reportedly led by more spot supply, with India’s state-run Mangalore Refinery and Petrochemicals Ltd., or MRPL, having emerged to offer 35,000 MT of 95 RON gasoline for loading March 15-17 from New Mangalore in a tender that closes on Feb. 17.
- Indian gasoline demand, which according to Platts had helped support the overall complex through December 2020 and early January, also showed signs of a slowdown, as domestic gasoline consumption in whole month January fall 3.54% (89,000 MT) vis-à-vis December 2020.
- Also exerting downside pressure was a weakening in the US gasoline-Brent crack due to latest data released by the US Energy Information Administration (EIA) which showed gasoline stocks climbing 4.3 million barrels the week ended Feb. 5.
- The inventory uptick was just shy of the 4.8 million barrels estimated by the American Petroleum Institute and far higher than the 2.7 million barrels anticipated by analysts surveyed by Platts.

Asian gasoil (diesel) market was reported steady with thinning supply and firm demand providing support to the complex and keeping it in a backwardated¹ structure.
- Sentiment in the Asian gasoil market was also supported by reports that ExxonMobil Australia plans to shut its 80,000 b/d refinery in Melbourne and convert it into a fuel import terminal; traders said that gasoil exports into Australia looks set to continue rising on the back of the announcement.
- There were also reports saying that lean production volumes from Japan and South Korea, and upcoming refinery turnarounds, could serve to cushion the impact of the bigger exports from China.
- Thus, Asian gasoil balances are likely to have further tightening over the next few months as upcoming refinery maintenance operators may opt for earlier and longer turnarounds due to the depressed margins.

FOREX: Philippine peso appreciated week-on-week against the US dollar by P0.02 to P48.04 from P48.06 in previous week.

DOMESTIC OIL PRICES

The oil companies implemented their price increase effective today, 16 February 2021. Gasoline has increased by P0.75 per liter, P1.25 per liter for diesel and kerosene by P1.10 per liter.

These resulted to the year-to-date adjustments to stand at a net increase of P4.00/liter for gasoline, P3.90/liter for diesel and P3.35/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

_______

¹ Market condition where the forward or futures contract price of a commodity (or oil) traded below the expected spot price at contract maturity.

Posted on: January 28, 2021 by pip_admin

Source: DOE Website

WORLD OIL PRICES (January 18-22, 2021 trading days)

Dubai crude has decreased week-on-week by almost US$0.50/bbl. Both MOPS gasoline and MOPS diesel have also decreased: gasoline by about US$0.65 per barrel and diesel by around US$0.30 per barrel.

Reasons for the Adjustment

With weak oil demand in Europe and the US, market analysts fear of renewed lockdowns in China could further weaken the demand outlook for oil and oil products.
- A new outbreak of coronavirus in some Chinese cities has sparked fears that the country could experience another wave of the pandemic.
- Chinese authorities have imposed mobility restrictions in affected cities, including Beijing, and have called on citizens to refrain from travel during the upcoming Lunar New Year holiday.
- Thus, China’s oil demand to see a sharp month-on-month decline of 1.3 million b/d in February.

On the other hand, Algerian Energy Minister Abdelmadjid Attar said that global vaccination campaigns and the resumption of international air traffic will support oil prices within $55-$60/b in the near term, but OPEC will be closely watching for clearer signals from new US President Joe Biden on whether he will ease sanctions on Iran and Venezuela.
- Any relief in the sanctions could unleash crude volumes that would complicate the producer bloc’s efforts to rebalance the market amid a still fragile global recovery from the coronavirus pandemic.

Sentiment around gasoline demand is unpromising with COVID-19 infections and associated measures are trending upwards in Indonesia, Malaysia, Japan, and China.
- Asia’s largest gasoline importer Indonesia is expected to import around 8 million barrels of gasoline in February as local demand was seen to have steady recovery through to the end of 2020.
- But with daily infections recently surging to the highest on record, the government has been pushed into new lockdown measures covering Jakarta, the rest of Java, and Bali. Hence, the outlook for Indonesian demand remains uncertain in the near term.
The diesel market outlook appears more uncertain, with some sources saying that the sentiment could turn more bearish ahead of expectations of a slowdown in activity across large parts of the region ahead of the Lunar New Year holidays. The situation may further be compounded by still healthy gasoil export flows from China over February.
- The conditions of low refinery runs, depressed demand, and closed arbitrage to Europe has left markets unresponsive to recent cold weather, which would traditionally be a positive driver for gasoil values (it being used as heating fuel).
- Regional balances could begin to tighten when spring refinery maintenance season begin to kick in. Some refiners may opt to start turnaround earlier because of current weak margins and demand.

FOREX: Philippine peso appreciated week-on-week against the US dollar by P0.01 to P48.06 from P48.07 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

The oil companies implemented their price decrease effective today, 26 January 2021, i.e. gasoline by P0.15 per liter and P0.10 per liter decreased both for diesel and kerosene.

These resulted to the year-to-date adjustments to stand at a net increase of P2.15/liter for gasoline, P1.55/liter for diesel and P1.50/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.

_______

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

Posted on: January 18, 2021 by pip_admin

Source: DOE Website

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

Dubai crude has increased week-on-week by around US$2.00/bbl. MOPS gasolineand MOPs diesel have also increased: gasoline by about US$2.60 per barrel and diesel by nearly US$0.90 per barrel.

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.

DOMESTIC OIL PRICES

The oil companies implemented their price increase effective today, 12 January 2021, i.e. gasoline by P0.85 per liter, diesel by P0.30 per liter and kerosene by P0.25 per liter.

These resulted to the year-to-date adjustments to stand at a net increase of P1.30/liter for gasoline, P0.60/liter for diesel and P0.65/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

Posted on: October 30, 2020 by pip_admin

Source: https://www.doe.gov.ph/oil-monitor

WORLD OIL PRICES (October 19-23, 2020 trading days)

Dubai crude has increased week-on-week by a little of US$0.03/bbl. On the contrary MOPS gasoline and diesel have decreased; MOPS gasoline by about US$0.15 per barrel and MOPS diesel by around US$0.90 per barrel.

Reasons for the Adjustment

Libya plans to ramp up crude production to 1 million b/d (MMB/D) in four weeks following the September United Nations-backed ceasefire in the country. The recently peace agreement lifted an eight-month blockade by the Libyan National Army on most crude exports.

Libya National Oil Corp. confirmed in reports last week that production would rise to 800,000 b/d in two weeks and to about 1 MMB/D in four weeks. As of October 20, Libyan production had risen to more than 500,000 b/d according to S&P Global Platts. Libya produced about 1.6 MMB/D of crude in normal situation.

Some analysts see the rapid rising of Libyan barrels to be an issue to the OPEC+ group as it could disrupt its quest to balance the oil market. Libya’s additional crude could change the story back to oversupply concerns as crude demand outlook weakens, as the world continues on restrictive measures and lockdowns to contain COVID-19.

OPEC+ tapered production cut to 7.8 MMB/D from 9.7 MMB/D in August, and is scheduled to roll back further to 5.8 MMB/D starting in January. However, with a second wave of coronavirus infections weighing on the oil market’s outlook, many OPEC+ ministers are expected to keep the current cuts in place.
Asian demand for Middle East crude was noted to have been recently increasing in view of higher demand by key importers-China and India for the December-loading cycle. Improved refining margins in October also helped boosted demand.
The Asian gasoline market ended the week on a soft note amid lackluster demand and greater supply, with more cargo offerings from India. Platts expect regional gasoline supply in an upturn as runs begin to climb in November after the maintenance.

The Asian gasoil/diesel market ended the week also on a soft note with oil industry sources reiterating that low demand and good supplies were still weighing on the market complex. Refinery runs are set to begin rising in November following the conclusion of October maintenance works. Platts however noted that healthy outflows of gasoil from Singapore to Australia, Malaysia and Myanmar were recorded in the past week.

FOREX: Philippine peso depreciated week-on-week against the US dollar by P0.02 to P48.58 from P48.56 in previous week.

DOMESTIC OIL PRICES

The oil companies implemented their price adjustments effective today, 27 October 2020. Diesel and kerosene have decreased; diesel by P0.25 per liter and kerosene by P0.15 per liter. No price movement has been effected on the price of gasoline.

These resulted to the total year-to-date adjustments to stand at a net decrease of P4.67/liter for gasoline, P10.26/liter for diesel and P13.59/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

Posted on: October 30, 2020 by pip_admin

The Mutual Aid for Response to Emergencies & Incidents Exercise/Drill aims to assess effectiveness of Mutual Aid Central Committee (MACC) procedure in terms of responding personnel’s safety and accounting of equipment lent. Built on mutual cooperation as the basic foundation of mutual aid and support, the Drills also test the inter-operability of PIP-member companies emergency response procedures vis-à-vis its alignment with the government, Local Government Units and other stakeholders’ emergency response resources available in a specific area of the drill site.

Critique sessions are conducted to draw lessons to identify improvements in emergency response mechanism of PIP member-companies and other stakeholders particularly in the event of any disasters and/or emergencies that is beyond the capabilities of the affected entity

Posted on: September 16, 2020 by pip_admin

WORLD OIL PRICES (September 7- 11, 2020 trading days)

Dubai crude has decreased week-on-week by about US$4.50/bbl. Both MOPS gasoline and MOPS diesel have also decreased: gasoline by around US$3.35 per barrel and diesel by nearly US$ 5.00 per barrel.

Reasons for the Adjustment

The US Energy Information Administration (EIA) stated in its monthly Short-Term Energy Outlook released this week that global oil demand grew by 1 million b/d (MMB/D) in August, the slowest month-on-month increase since demand started recovering from coronavirus lockdowns in May. Last month (August) global supply growth surpassed demand growth, the first time during the recovery period.
The EIA cut its outlook for 2021 global oil demand growth by 500,000 b/d from last previous month forecast to 6.5 MMB/D on lower expected consumption growth in China. EIA now sees China demand growing 1 MMB/D next year, down from 1.5 MMB/D in last month’s forecast.
Reportedly, OPEC 13 members produced 24.37 MMBD in August (a 4% rise from July) while its nine partners, including Russia, added 12.67 MMB/D (a 6% increase). The higher output was expected as the OPEC+ coalition had been scheduled to ease output to 7.7 MMB/D (from 9.7 MMB/D in June and July) for the rest of the year starting in August. The group achieved 97% compliance with its new quotas in the month, according to Platts calculations.
However, OPEC’s increased production is coming at a time when the rapid recovery of global oil demand appears to be stalling, amid fears of a growing second wave of COVID-19 infections. Thus, Crude oil markets have softened markedly over the past week, with Dated Brent falling below $40/b for the first time since mid-June. In the sour crude market, Dubai times-spreads had been on an upward trend for the second half of August but have seen a sharp reversal over the past two weeks. The Dubai M1/M3 time-spread was at minus 73 cents/b on September 10.
Asian gasoline weakens during the week (Sep 4-11) as supply concerns return, dragging on fundamentals of Asian gasoline time-spreads that slipped deeper into contango later in the week. However, Singapore gasoline cracks (crude vs. gasoline) are now above gasoil/diesel for the first time since 2017 and could see additional support with refinery maintenance set to rise heading into October, in addition to extended accident-related outages such as Taiwan’s Formosa and Malaysia’s Pengerang.
The slump in Asian gasoil/diesel markets bottomed out, but with little sign of any recovery developing. The Singapore gasoil vs. Dubai crack was stable at $3.00/b, up moderately from last week lows. Market sentiment remains unpromising on a slowing demand recovery, high stock levels, and expectations of continued heavy exports from China though the rest of the year.
Singapore middle distillate stocks fell by 6% week-on-week to 15.05 million barrels. But despite the drop, Platts noted that stock levels remain high by historical standards, as this week’s total is the second-highest since September 2016.
A lack of European demand for gasoil will see more Middle Eastern and Indian volumes heading east to Southeast Asia, adding to the pressure on Singapore prices. With US Gulf Coast low sulfur gasoil stock at record highs and 66% higher year on year, it is difficult to see additional gasoil from the East of Suez moving to Europe even as the winter season approaches.1

1 Platts’ Asia Pacific Weekly Recap, 11 September 2020

FOREX: Philippine peso depreciated week-on-week against the US dollar by P0.05 to P48.60 from P48.55 in previous week.

DOMESTIC OIL PRICES

The oil companies implemented their price adjustments effective today, 15 September 2020. Gasoline has decreased of P1.00 per liter, diesel by P1.50-P1.55 per liter and kerosene by P1.45 per liter.

These resulted to the total year-to-date adjustments to stand at a net decrease of P5.22/liter for gasoline, P10.99/liter for diesel and P15.39/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

Posted on: August 11, 2020 by pip_admin

Enacted into Law on 19 December 2017 and took effect 01 January 2018, the Tax Reform for Acceleration and Inclusion (TRAIN Act) generally, was established to generate revenue to achieve the vision of the Duterte Administration for the country including eradication of poverty, create inclusive economic environments to open equal opportunities, achieve higher income country status and pave the way for simpler, fairer and efficient tax system.

Being the first of four packages of tax reforms to the National Internal Revenue Code of 1997 (Tax Code), some modifications introduced in the package includes changes in the personal income tax (PIT), estate tax, donor’s tax, value added tax (VAT), documentary stamp tax (DST) and the excise tax of tobacco products, petroleum products, mineral products, automobiles, sweetened beverages and cosmetic procedures.

The TRAIN Act imposes excise tax on downstream oil industry including LPG, diesel fuel and premium gasoline (regular and unleaded) with a total increased amount per liter of P3.00, P6.00 and P10.00 respectively, implemented in three tranches from 2018, 2019 and 2020. The translated incremental increase on excise tax per product from 2018, 2019 and 2020 is presented in Table below.

	Prior to 2018	1^st Tranche 2018	2^nd Tranche 2019	3^rd Tranche 2020	Total Excise Taxes
LPG	0	+1.00	+1.00	+1.00	+3.00
Diesel	0	+2.50	+2.00	+1.50	+6.00
MOGAS	4.35	+2.65	+2.00	+1.00	+10.00

In 2018 alone, excise tax per liter for specific fuel products is priced for LPG (P1.00), bunker fuels (P2.50), Diesel (P2.50), Petcoke (P2.50), Kerosene (P3.00), Avgas (P4.00), gasoline (P7.00), naphtha (P7.00), asphalt (P8.00), lubricating oil (P8.00), paraffin wax (P8.00) and refined fuels (P8.00).

The Philippine Institute of Petroleum (PIP) supports the government’s infrastructure program to sustain inclusive economic growth and investments in the social capital and likewise recognizes the inflationary impact of high fuel prices as traders readily blame the fuel price hike as reason for increase in prices of prime commodities. This given the fact that BSP has estimated that out of 6.7% inflation hike, only 0.7% point is attributable to TRAIN and fuel only accounts for 0.4% point.

PIP posits that the imposition of TRAIN 1 to downstream oil industry specifically the significant increase in the specific/excise taxes will have inflationary impact to various sectors, calculated impact/impact study of inflation, and further incentivization of fuel smuggling activities in the country.

Furthermore, PIP recommends to the government to highly consider minimal disruption on company operations in Fuel Marking Program implementation; sale of power or fuel generated from renewable sources of energy to be VAT-exempt instead of zero-rated; removal of exemption of sales to entities covered by special laws; and inclusion of VAT-exempt transactions (Sect. 109) – on the sale of raw materials used in the production of biofuels.

CITIRA (formerly TRABAHO Bill)

House Bill (HB) No. 7458 or the Corporate Income Tax and Incentives Reform Act (CITIRA) formerly Tax Reform for Attracting Better and High Quality Opportunities (TRABAHO Bill), with Senate version SB No. 1357, forms part of the Package 2 of the Comprehensive Tax Reform Package (CTRP) of the Duterte Administration. This Package 2 ‘seeks to lower corporate income tax (CIT) rate gradually from 30% to 20%, reorient fiscal incentives toward strategic growth industries, and make incentives available to investors who make net positive contributions to society’.

PIP supports the lowering of the Corporate Income Tax Rate, reforming the tax system and broadening the tax base in support of sustained economic growth and job generation. Further, PIP recommends a revisit of the provision on the repeal of tax incentive benefits of its customers, i.e. exemption from VAT and other local business taxes; revisit the plan to repeal the 123 special law granting various incentives to the deserving taxpayers; retain the current 5% tax benefit based on net taxable income; maintain the optional standard deduction (OSD) at 40% instead of the proposal to reduce the 40% to 20% and reword of Transfer Pricing provisions in the Philippine Tax Code. Reword of Transfer Pricing to reflect the application of transfer pricing guidelines for domestic and cross-border transactions instead of granting the Commissioner blanket authority to disregard and counteract tax avoidance arrangement (consider same as void).

Posted on: August 11, 2020 by pip_admin

The Philippines having been a signatory to the International Maritime Organization’s (IMO) directive on October 2017 under the terms of the IMO’s MARPOL Annex VI Regulation, is directed to go ahead with a global sulfur cap of 0.5% on marine fuels starting from 01 January 2020. The Convention on IMO conferred upon the function of Marine Environment Protection Committee (MEPC) for the prevention and control of marine pollution from ships. MEPC adopted in its resolution (RESOLUTION MEPC.320 74) a revised MARPOL Annex VI which significantly strengthens the emission limits for sulfur oxide (SO_x).

The Department of Foreign Affairs (DFA) provides representation of the Philippine Government in the International Maritime Organization and the Maritime Industry Administration (MARINA) serves as implementing agency of MARPOL Annex VI.

In June 2018, PIP generally sought the government’s plan on its implementation, enforcement and monitoring. The position and recommendation cover the readiness of the shipping industry (both international and local) to comply with MARPOL Annex VI, country’s assessment of the supply availability of readily-compliant fuel, and engagement of relevant stakeholders (i.e. shipping industry, oil suppliers and government enforcement agencies). The stakeholder engagement is crucial to assess the potential impacts of this international regulation not only to marine fuels but also on the cost of impact on freight for all sea-borne imports and exports of petroleum products.

The PIP expresses its concern that with the increasing trend in crude and finished product’s price in the world market, compliance to MARPOL Annex VI strict regulation on ship’s engine emissions addressed either by installation of the prohibitively priced emission control devices (scrubbers) or use of the high priced 0.5% sulfur bunker fuel, the regulation will further put the domestic shipping industry in an uncompetitive stance via-a-vis other comparative shipping industry in the region as its direct impact to the industry.

The PIP generally expresses the potential impacts of this international maritime regulation to the downstream oil and shipping industries, and specifically the freight costs for all sea-borne imports and exports of crude and petroleum products. Significant price increases in low sulfur fuel oil shall impact on shipping costs which eventually will be reflected in petroleum product prices which in turn shall impact on prices of commodities which will induce higher headline inflation. The shipping association estimates of a 2-4% increase in freight for every P1/increase in fuel cost, is considered to be a conservative estimate.

In view of the foregoing, the PIP communicated to DFA through MARINA the following recommendations:

The Philippine Government has the exclusive decision whether this regulation will move forward in 2020 or may consider possible deferment subject to due consultation with various stakeholders without prejudice to the country’s commitment or global obligations on the matter;
To better guide the Government in making its decision, the industry recommends to the Philippine Government to conduct study to: (i) assess the sources and nature of air pollutants in local/domestic waterways and (ii) assess the oil industry readiness to supply domestic demand by 2020 and the shipping industry’s ability to utilize low sulfur fuel readily;
In relation to the extension/adoption of the 0.5% sulfur cap to inland/local marine fuels for domestic vessel dedicated to local/territorial water shipping, the downstream oil and shipping industries request for a thorough review of this local application amongst the different local stakeholders in the country;
Revisit implementation best practices/models of other countries specifically those adopting the Emission Control Areas (ECA) designated under MARPOL Annex VI to provide a global perspective of the implementation of this IMO regulation.

MARINA in coordination with the PCG- Maritime and Ocean Affairs Office (PCG-MOAO) organized the country’s participation in the 75^th Session of the Marine Environment Protection Committee (MEPC75) to be held from March 30 to April 3, 2020 at the IMO Headquarters in London, United Kingdom. However, this international event might be pushed forward considering the enhanced community quarantine declaration amidst the covid-19 crisis in the world. MEPC is the international maritime committee regulating, monitoring and evaluating relevant policy issuance and country performance for marine pollution agenda as provided in Annex VI of IMO 2020.

The PIP together with its six member-companies acknowledge the IMO MARPOL Annex VI provision of low sulfur content for international marine fuels effective January 2020 and fully support its compliance subject to the Implementing Rules and Regulations to be developed by the concerned state regulator (MARINA).