WORLD OIL PRICES (November 30-December 04, 2020 trading days)

Reasons for the Adjustment

• In the November 30 to December 3 meeting, OPEC+ agreed on a new production deal to start 2021 as the group has settled on a 500,000 b/d increase to supply in January, and a rolling monthly review that will raise or cut production by 500,000 b/d each month until production is increased by a cumulative 2 million b/d.
  • The deal agreed falls short of prior expectations that current production cuts of 7.8 million b/d would be extended in full for three months. Instead, the likely result is a staggered production increase over the next three months or longer. This avoids a breakdown of OPEC+ unity amid the continued threat to demand from COVID-19. Thus, it remains to be seen how the rolling monthly review will impact movements in the crude market.
  • The reduced supply relative to the original planned tapering of cuts is expected to support oil prices if the general risk on environment for financial assets continues.¹  Platts Analytics however sees the OPEC+ decision as a fair and rational outcome given uncertainty around the pandemic and pace of oil demand recovery. The agreement avoids a sharp production increase in January while still acknowledging the push by some OPEC+ members (Russia, UAE, others) to add supply at $45/bbl oil prices.

• On the demand side, Platts underscored positive demand growth trend in Asia for crude oil, especially from key buyers like India, China, Japan and South Korea. This follows fresh indications of healthy demand from regional refiners; thus, supporting sentiments in the Middle East crude oil market.

• Demand for gasoline is relatively steady, with buyers from Indonesia, Australia, India, Pakistan, and Vietnam all seeking supplies over the past week.²  This was proven as stocks in Singapore last week are also below the average of 12.6 million barrels for 2019. This suggests supply -demand fundamentals in the region are now close to balanced, albeit at weak crack levels.
  • Asian gasoline demand has largely returned to pre-pandemic levels, which indicates further demand recovery in Western markets or additional refinery cuts in Asia may be needed for gasoline cracks to see further recovery.

• For gasoil/diesel, demand fundamentals remain lackluster but tighter supply due to refinery run cuts and capacity closures are relatively supporting prices. However, high stocks of middle distillate in Singapore capped price uptick as gasoil volumes from the Arab Gulf were moving towards Asia. Gasoil imports into Singapore from India and the Middle East are up by 58% vs the whole of 2019.

FOREX: Philippine peso appreciated week-on-week against the US dollar by P0.07 to P48.07 from P48.13 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

These resulted to the year-to-date adjustments to stand at a net decrease of P3.22/liter for gasoline, P7.36/liter for diesel and P10.59/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