WORLD OIL PRICES (November 23-27, 2020 trading days)
Dubai crude has increased week-on-week by almost US$3.00/bbl. MOPS gasoline and diesel have also increased by around US$3.50 and US$3.25 per barrel, respectively.
Reasons for the Adjustment
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The market have been closely watching a key OPEC+ meeting that started on Nov. 30 to Dec. 1, where the announcement of a possible deepening of production cuts could prop up the market.
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Traders expect the group to extend supply cuts for at least three months into 2021. Lifting of the quotas, set to expire on Jan. 1, will result in an additional 2 million b/d (MMB/D) of oil hitting the market.
- But some hard conversations over the future of the deal - and the alliance itself - could complicate a decision. The UAE may be considering splitting from the group, while Iraq and Nigeria are appealing to pump more.
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- Further, the recent vaccine-propelled rally in crude prices will test everyone's resolve to see through their landmark supply accord. Crude prices rose by about $5/b week-on-week on continued optimism over COVID-19 vaccines and OPEC+ production cuts.
- Platts Analytics would note that the timeline for vaccine rollouts remains uncertain, highlighted by news that the Oxford-AstraZeneca vaccine will undergo a further trial following uncertainties over the data from the last trial. With lockdowns still in effect in parts of Europe, US infections continuing to rise, and fresh outbreaks in Hong Kong and South Korea, they believe that prices still face headwinds despite the recent constructive action.1
- The Asian gasoline market rose marginally in early trading, brought by a higher US RBOB-Brent crack, despite data showing a more-than-expected US gasoline stock build in favor of bullish macroeconomic themes.
- The Asian gasoil complex was largely steady as reports of rising COVID-19 infection rates in the region bleakly reminds that demand uncertainty continues.
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A sliding dollar saw the front-month ICE US dollar index fall below 92 in late Nov. 25 trading - a highly bullish factor for the overall oil complex.2 The US dollar has come under renewed pressure as the administration of Presidentelect Joe Biden starts to take form.
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According to S&P Global Platts Analytics, a Biden presidency is expected to be more supportive of stimulus spending, fostering faster economic growth and a weaker dollar.
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In addition to a faltering dollar, vaccine hopes have continued to fuel optimism in the US RBOB-Brent crack, with participants noting that the news could spur more driving over the holiday season.
FOREX: Philippine peso appreciated week-on-week against the US dollar by P0.11 to P48.13 from P48.24 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, 01 December 2020. Gasoline increased by P1.15 per liter and P1.10 per liter increase both for diesel and kerosene..
These resulted to the year-to-date adjustments to stand at a net decrease of P3.47/liter for gasoline, P7.76/liter for diesel and P11.19/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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1 Asia-Pacific Weekly Recap, November 27, 2020
2 The ICE U.S. Dollar Index (USDX) futures contract is a leading benchmark for the international value of the US dollar and the world's most widely-recognized traded currency index. In a single transaction the USDX enables market participants to monitor moves in the value of the US dollar relative to a basket of world currencies, as well as hedge their portfolios against the risk of a move in