Oil Monitor as of 02 March 2021

Date published: March 2, 2021

WORLD OIL PRICES (February 22-26, 2021 trading days)

Dubai crude has increased week-on-week by almost US$1.20/bbl. Both MOPS gasoline and MOPS diesel have also increased by around US$2.00 per barrel.

Reasons for the Adjustment

  • Financials are driving oil prices and structure higher, despite some indicators on physical crude remaining weak.1
    • Oil prices have recent increases as markets anticipate tighter supply/demand balances in the months to come augmented by wider financial interest in most commodities & risk assets.
    • Crude and product stocks are still higher than pre-COVID levels particularly relative to demand, but weakness in physical crude differentials indicates supply is adequate for now.2
  • The crude price rally presents OPEC+ with a tricky decision to reconcile surging prices with a weaker picture from demand fundamentals and inventory levels.
  • With the upcoming OPEC+ meeting this Thursday, March 4, the looming expectation of a large supply hike announcement will test whether the recent crude price rally is sustainable.
    • Saudi Arabia is expected to revoke its unilateral 1 million b/d (MMB/D) production cuts in the meeting.
    • OPEC+ as a whole is also to announce a further 500,000 b/d output increase for April.
    • Overall, Platts projects April OPEC+ supply will increase by some 1.8 MMB/D as members are expected to have deteriorating compliance.
  • Bloomberg reported that issues on OPEC+ production/supply, Covid-19 vaccines, China and the US are the current oil market catalysts. “At the moment, we are seeing both demand and supply side catalysts driving the price of oil higher, as hopes of sustained economic recovery and lower levels of production could equate to a deficit of the commodity in 2021”.
  • Asian gasoline remained bullish as the effect from US Gulf Coast refinery shutdowns continues. Singapore gasoline-Dubai cracks and timespreads consolidated most of the gains seen over the past two weeks.
    • Regional demand also appears more positive, with Indonesia now expected to import between 9-9.5 million barrels of gasoline in March, up from 8 million barrels in February.
    • Demand from Indonesia, Asia’s largest importer is set to improve with falling rates of COVID -19 infection and the start of vaccinations.
  • Light distillate stocks in Singapore retreated to a four-week low in the week ended Feb. 24 on rising gasoline exports amid sliding inflows from non-Asian sources, which helped to lower its inventories.
  • Also supporting the Asian gasoline market are refinery shutdown in South Korea's third-biggest refiner S-Oil Corp., where two of the residue fluid catalytic cracker units at the 669,000 b/d Onsan refinery had unexpected glitches. Refiner Hyundai Oilbank's Daesan also have plans to shut its 50,000 b/d residue desulfurization unit for 15-17 days in early May to complete a catalyst change.
  • The Asian gasoil/diesel market was in mixed sentiment. Some traders opined of good supply volumes for March, on a combination of inflows as well as healthy exports from China that was keeping the region supplied. Others however pointed to still low regional production that has lifted prices.
    • Malaysia Pengerang refinery has delayed its restart until early in the second half of the year; the 300,000 b/d refinery was previously expected back in the first quarter.
    • Supply from Japan also remains low as domestic gasoil production slid 16.8% in the 3rd week of February with refinery output reportedly down by 24.2% on a year-on-year basis.
    • Export from South Korea reached multiyear low as it fell 30.6% yearon-year to 11.92 million barrels in January, but is seen to increase in coming weeks as improving margins prompt refiners to increase run rates.
    • Higher gasoil exports from China as well as steady inflows of gasoil into Asia weighed on sentiment. The country’s higher gasoil exports in March vs. February, coupled with the prospect of higher regional supplies, are expected to exert downward pressure on the market.
    • Some Indian and Persian Gulf [gasoil] barrels are also expected to arrive to Singapore this Month.

FOREX: Philippine peso depreciated week-on-week against the US dollar by P0.39 to P48.64 from P48.25 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 the price increase effective today, 02 March 2021. Gasoline has increased by P1.00 per liter, P0.85 per liter for diesel and kerosene by P0.70 per liter.

These resulted to the year-to-date adjustments to stand at a net increase of P6.20/liter for gasoline, P5.70/liter for diesel and P5.05/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 SP Global Platts news
2 World Oil market Forecast as of 26 February 2021

Pages