WORLD OIL PRICES (November 2-6, 2020 trading days)
Dubai crude and MOPS diesel have increased week-on-week by about US$0.50/bbl. On the contrary, MOPS gasoline has decreased by around US$0.60 per barrel.
Reasons for the Adjustment
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The market for Asian-oriented sour crudes remains relatively strong as prompt demand from from Asian refiners, particularly China and India, brought stronger price indicators during most of the week.
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Oil prices climbed, after about $4/bbl dip last on Monday, on the back of stronger-than-expected US economic data. The US manufacturing PMI1 increased to 59.3 in October, reportedly the highest since November 2018
and up from 55.4 in September. Yet, this offset concerns that economic growth would sharply contract in the fourth quarter.
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However, Platts noted that some traders were skeptical about any actual change in the underlying demand-supply fundamentals. Refining margins are still not good, and Libyan production is recovering that will provide more barrels to the market. Also, the ample availability of arbitrage barrels amid weaker European demand could put pressure to lower light sour crude this November.
- Further to the recovering Libyan crude output and expanded pandemic lockdown in Europe, there is a growing consensus that group leaders Saudi Arabia and Russia will push for a freeze on current production cuts to support prices; thus, delaying the return of an additional 1.9 million b/d (MMB/D) of supply beginning in January. The prospect of OPEC+ action helped Dated Brent prices climb back to $40/bbl after trading below this territory early in the week. Dubai crude was also trading at similar level this week.
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For gasoline, Indian gasoline output in September increased around 10.3% month-on-month to 846,000 b/d due to a large jump in refinery runs, which was up by 13% from August to September to 4.39 MMB/D. It is expected to rise further to around 4.7-4.8 MMB/D in November/December as demand in the country likewise recovered 80% from the peak of lockdowns in April-May.2 The rest of the country’s production are exported, as it increased by 13% to 279,000 b/d in September 2020.
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For gasoil/diesel, while the winter period is supportive of middle distillate values, Platts sees the outlook to remain flat partly due to diminished European demand resulting from COVID-19 lockdowns and mild temperatures forecasted for the northern hemisphere over the next few months.
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Supply for gasoil is seen as relatively stable in Asia with increasing refinery runs after the conclusion of the October maintenance round. Asian refinery runs excluding China is seen to increase by about 400,000 b/d, still lesser compared to 1 MMB/D in November 2019.
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Platts further noted that weak refining margin may keep gasoil supply constrained through the winter season. Singapore gasoil vs. Dubai crack remained little changed at $3.29/b. It is slightly higher than Singapore RON 92 vs. Dubai crack that dipped to $2.20/bbl during the week.
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FOREX: Philippine peso appreciated week-on-week against the US dollar by P0.05 to P48.35 from P48.40 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 adjustments effective today, 10 November 2020. Gasoline has decreased by P0.20 per liter. On the opposite, diesel and kerosene have increased by P0.20 and P0.40 per liter, respectively.
These resulted to the year-to-date adjustments to stand at a net decrease of P5.67/liter for gasoline, P10.91/liter for diesel and P13.89/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 Purchasing Managers' Index -a reading above 50 indicates expansion in the sector; below 50 indicates contraction
2 Platts Asia Pacific weekly recap, 06 Nov 2020