WORLD OIL PRICES (June 14-18, 2021 trading days)
Dubai crude has increased week-on-week by almost US$1.50/bbl. MOPS gasoline and diesel have also increased by around US$1.40 and US$1.25 per barrel, respectively.
Reasons for the Adjustment
- Oil prices have risen for the fourth consecutive week and both West Texas Intermediate (WTI) and Brent have comfortably settled above the $70 per barrel mark.
- WTI closed the week at $71.64 per barrel. The Brent crude price closed the week at $73.51 per barrel, its highest level since the end of October 2018. This means that prices have risen by around 40 percent since the beginning of 2021, and more than 70 percent from last year, even though air traffic and travel are not yet back to pre-pandemic levels.
- Breaching the $70 per barrel mark means that hedge funds boosted their positions to pre- pandemic levels, encouraged by signs of a rapidly recovering global economy and continued output restraint among US shale producers. The tightness in the forward curve for oil futures continues giving more signs of supply tightness.
- In the recent forecast by Platts, the global oil demand is expected to grow by 5.6 million b/d (MMBD) in 2021, a moderate increase from 5.5 MMBD projection last month.
- From June to August, global oil demand is still expected to grow by 6.9 MMBD due to seasonal uplifts along with normalization from recent lows in demand.
- Despite the downward projection for India due to lockdown measures, the upgraded outlook for Europe, resilience in the US, China and the Middle East continue to provide support.
- Global oil supply is expected to grow by 3.0 MMBD in 2021, about 0.2 MMBD lower than their prior outlook.
- The Platts report noted the downward revision as mainly driven by US and OPEC+ as the later continues to maintain a “wait and watch” strategy to bring back supply gradually as demand recovers.
- On US-Iran deal, the full sanction relief on Iran is expected in September, facilitating crude and condensate export growth from 600,000 b/d in May to 1.5 MMBD by December
- Overall, the gradual increases of supply from Saudi & OPEC+ this summer season when demand is expected to grow much faster will result in significant inventory draws, and it is seen to be a strong indication of higher oil prices.
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Platts Analytics expects Dated Brent crude prices to increase to over $70/b in mid-year and lower back to $60/bbl by the 4Q of 2021 on the likely return of Iranian crude and higher US supply.
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Gasoline was trending lower towards the end of the week as global supply increases with most refineries concluded spring maintenance works and are ramping up throughputs to meet summer demand. As may be recalled, buoyed sentiment amid supply tightness extended from previous week up to early this week on reduced exports from China and Indian.
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Singapore data showed onshore light distillate stocks jumped this week to nine- week high by 2.1 million barrels (MMB) or 17.5% to 14.23 MMB.
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The build-up is attributed to a second straight week of slowdown in gasoline exports from the city state, which mirrored the slowdown in regional demand.
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Platts reported that Asian gasoil/diesel markets is in a transition period, with multiple drivers in action but lacking any overall direction. Total regional refinery runs are rising as spring maintenance ended.
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Refiners in Taiwan and South Korea were reported stepping up exports while Chinese exports were trending lower due to recent taxation changes on imports
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Refinery capacity closures in Australia and Singapore also tighten supply.
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FOREX: Philippine peso depreciated week-on-week against the US dollar by P0.42 to P48.13 from P47.71 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 22 June 2021, the oil companies implemented a price increase in domestic oil products. Gasoline has increased by P0.75 per liter and P0.70 per liter increase for both diesel and kerosene.
These resulted to the year-to-date adjustments to stand at a total net increase of P10.75/liter for gasoline, P9.25/liter for diesel and P7.70/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