WORLD OIL PRICES (December 21-25, 2020 trading days)
Dubai crude has decreased week-on-week by nearly US$0.60/bbl. MOPS diesel and gasoline have also decreased by around US$0.40 and US$0.10 per barrel, respectively, for this trading period.
Reasons for the Adjustment
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Middle East crude oil market faces persistent doubts on demand as the holiday season approaches. As the week ended, trading activity eased further with most purchases reportedly done for the month and sellers watching over the mounting risks of a supply overhang.
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With a new COVID-19 strain increasingly threatening demand especially in the West, traders expect OPEC+ in the January 4, 2021 meeting to reconsider its decision to roll back cuts, given the potential effect of the new COVID-19 strain on oil consumption.
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The OPEC+ coalition agreed on Dec. 3 to raise their aggregate crude production by 500,000 b/d in January and meet monthly to decide subsequent output levels.
- Based primarily on the return of OPEC+ output, the S&P Global Platts Analytics has revised its global supply outlook higher for 2021.
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- Expectations for the New Year:
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Asian demand is expected to remain steady but cheaper arbitrage barrels from the West may impact Middle East crude prices.
- Market participants anticipate a quiet start to trade next month amid ample supply and the need for oil producers to relook official selling prices for Middle East crude.
- NYMEX front-month crude is nearing the $50/b level, where many US producers had said they could be profitable earlier in the year, before the coronavirus hammered global oil demand; hence producers will be in no rush to turn on the taps at $50/b despite coronavirus vaccines now being distributed.
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- The Asian gasoline demand fundamentals has little change despite the unexpected draw in US gasoline stocks and higher cracks that it may have gained some support,
- The winter period is typically a low season for gasoline demand, which is exacerbated by COVID-19 factors.
- The Asian gasoil market remains calm ahead of the long Christmas weekend with Singapore closed on Dec. 25.
- Improvement in gasoil/diesel cracks (crude vs gaoil) in the past three months has been noted slow but in consistent pace, in view largely to the effectiveness of Asian refiners curtailing run rates while demand continues to recover.
- The steadiness in the gasoil market comes even as traders eyed higher inflows of gasoil to Asia from India and the Middle East.
- Market participants said the flows to Asia have come amid poor demand in Europe, with tightening restrictions being implemented to curb the spread of the coronavirus as medical conditions deteriorate in the UK, Germany and the Netherlands.
FOREX: Philippine peso depreciated week-on-week against the US dollar by P0.01 to P48.07 from P48.06 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, 29 December 2020. Diesel by P0.05 per liter and P0.25 per liter decrease for kerosene. No movement is effected on the price of gasoline.
These resulted to the year-to-date adjustments to stand at a net decrease of P5.96/liter for diesel and P9.49/liter for kerosene. Gasoline remains at net decrease of P1.97/liter.
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