WORLD OIL PRICES (January 11-15, 2021 trading days)
Dubai crude has increased week-on-week by around US$2.60/bbl. Both MOPS gasoline and MOPs diesel have also increased by about US$3.00 per barrel.
Reasons for the Adjustment
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Platts Analytics see that global demand recovery continues to be pulled in two opposing directions: high COVID-19 infections and lockdowns under the shadow of a second-wave pandemic vs. better vaccines that are more readily available.
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It further expects global oil demand to grow by 6.3 million b/d (MMB/D) in 2021. The East (China, India and other Asian countries) continues to outperform the West (US, Europe) in demand recovery.
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On the other hand, global oil supply will decline for Q1 2021 after OPEC+ quota rollover and Saudi Arabia unilateral decided to cut 1 MMB/D below its official pledge in February and March.
- Saudi Arabia’s move to reduce supply comes amid an overall decline in crude demand across Asia due to peak refinery maintenance season from March to April. The resurgence of Covid-19 infections across Asia and Europe and the declaration of a state of emergency in parts of Japan and Malaysia are also reducing fuel consumption and keeping refinery run rates low.
- However, US production could lift, according to analysts, by around 150,000 b/d if the higher oil prices seen at the start of the year is sustained. But the impact of which will be felt in the second half of 2021.
- For 2020, global oil supply was lower by 7.1 MMB/D, before recovering by 3.8 MMB/D in 2021, led by OPEC and Russia.
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Oil price has surged more than 45% since the end of October, boosted by Covid-19 vaccine breakthroughs and commitments from OPEC and its allies to curb oil output.1
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With the peaking-up in crude prices, Goldman Sachs Group Inc. expects Brent to reach $65 a barrel by the summer. It expects to peak up earlier than previously anticipated, given the recent pledge of Saudi Arabia to cut output deeper by one million barrels per day starting February, a move that Goldman said will bring forward market tightness. The kingdom also increased its official selling prices to Asia this month, and was followed by Iraq, Abu Dhabi and Kuwait.
- Gasoline continued to gain at a steady pace, tracking recent growth for US gasoline crack. Also, Asian gasoline is being supported by some tightening supply in the region.2
- In India, HPCL shut an FCC unit at the Mumbai refinery (150,000 b/d) for 2-3 weeks due to a fault, which will lead to increased gasoline imports.
- Taiwan’s Formosa announced a shutdown of an 84,000 b/d RFCC for two months from Feb. 23.
- Petron in Philippines has suspended its Bataan refinery (180,000 b/d) indefinitely due to low margins.
- Modest export from China as it prioritizes domestic demand ahead of the Lunar New Year period.
- For gasoil/diesel, cold weather in northern parts of Asia and Europe are positive drivers for middle distillate prices including diesel (it being used as heating fuel).
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1 https://www.worldoil.com/news/2021/1/11
2 Asia-Pacific Weekly Oil Recap, 14 January 2021
FOREX: Philippine peso depreciated week-on-week against the US dollar by P0.02 to P48.07 from P48.05 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 increase effective today, 19 January 2021, i.e., gasoline by P1.00 per liter, diesel by P1.05 per liter, and kerosene by P0.95 per liter.
These resulted to the year-to-date adjustments to stand at a net increase of P2.30/liter for gasoline, P1.65/liter for diesel and P1.60/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