Oil Monitor as of 16 March 2021

Date published: March 17, 2021

 

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

Dubai crude has increased week-on-week by around US$3.80/bbl. Both MOPS gasoline and MOPS diesel have also increased: gasoline by almost US$4.00 per barrel and diesel by nearly US$2.50 per barrel.

Reasons for the Adjustment

  • OPEC Oil Market Report released March 11 revised up its forecast of 2021 oil demand by 220,000 b/d to 96.27 million b/d (MMB/D), but said the recovery would be backloaded in the second half of the year, after disappointing data in Q1.
    • Estimates for Q3 and Q4 were raised by 400,000 b/d and 970,000 b/d, respectively, while Q1 and Q2 were lowered by 180,000 b/d and 310,000 b/d.
    • The increase of oil demand in 2H21 reflected expectations for a stronger economic recovery with the positive impact of vaccination rollouts.
    • Meanwhile, “oil requirements in first half 2021 are adjusted lower, mainly due to extended measures to control COVID-19 in many key parts of Europe, and elevated unemployment rates in the US slowed the recovery process."

  • PIRA’s Asia Pacific Oil Market Forecast released 11 March 2021 projected the Q1 demand at 2.3 MMB/D, lower than that of Q4 2020, impacted by low activity during the China Lunar New Year (-1.2 million b/d) and the recent Texas Freeze (-300,000 b/d).

  • Going forward, with increased business activities, lower new COVID-19 cases and increasing vaccine rollout, global oil demand is foreseen to grow strongly this summer, expecting demand in June to be over 5 MMB/D, higher than that of March.
  • Thus, overall demand is expected to grow by 5.9 MMB/D in 2021, after a contraction of nearly 9 MMB/D in 2020 but remain 3.1 MMB/D below that of 2019. PIRA however noted that there are downside risks with high oil prices putting the recovery in countries like India at risk.
  • On the supply side, Saudi Arabia and OPEC+ presented a strong and bullish message at their March 4th meeting, urging caution and vigilance ahead of an uncertain demand recovery.
  • On crude, prices in Asia have elevated following the drone strikes on Saudi Arabian oil facilities, targeted just two days after the largest crude exporting nations in the world said they would not increase output.
    • Reports however revealed that the March 7 attack on the Saudi Ras Tanura terminal did not disrupt oil supply, and that ample global spare capacity keeps market attention focused on OPEC+ cuts and demand growth for now. Hence, prices had marginal decrease mid-week.
    • PIRA estimated spare capacity to fall from 7.6 MMB/D in March to 2.8 MMB/D by December, of which 60% of the latter is in Saudi alone, raising the importance of Iran-related tensions in the Middle East.
  • A sharp drawdown in US gasoline inventories and a rally in the US gasoline-Brent crack helped strengthen the Asian market this week.
    • The US gasoline-Brent crack pushed to fresh 3.5-year highs due to rising demand and storm-battered production that contributed to the sharp contraction in US gasoline supply in the first week of March.
    • Per the recent US-EIA data, the country’s gasoline stocks fell 11.87 million barrels in the week ended March 5 to 231.6 million barrels. The inventory was reportedly lower by 6% than the five-year average.
  • The price of gasoline also found support from improving demand from the Mediterranean amid a lack of winter-grade material on the spot market. Some countries in the region have been easing coronavirus restrictions as the rollout of the vaccine program ramps up.
  • The Asian gasoil market remained moving within a narrow band March 12, with fundamentals holding largely steady at the end of the week. Supply concerns have dominated the marginal shifts observed during the week.

FOREX: Philippine peso appreciated week-on-week against the US dollar by P0.05 to P48.53 from P48.58 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, 16 March 2021. Gasoline has increased by P1.25 per liter, P0.90 per liter for diesel and P0.85 per liter for kerosene.

These resulted to the year-to-date adjustments to stand at a net increase of P7.35/liter for gasoline, P6.25/liter for diesel and P5.35/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.

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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

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