WORLD OIL PRICES (August 24-28, 2020 trading days)

Reasons for the Adjustment

• The crude market outlook remains at risk of downward pressure according to sour crude trade sources. Demand for medium-heavy crude grades like Oman and Upper Zakum was mostly tepid for the October-loading cycle, with weak Chinese uptake due to ample inventories. Buying interest for light crudes like Murban from India and Japan were also capped by limited refinery run rates. Analysts expect the run rate of refineries in India to remain lower-than-usual in August. Japan’s crude throughput falling as well to about 70% of capacity.
• Barclays foresee oil demand to largely recover by the end of 2021, except for commercial civil aviation. The bank said its bullish call on gasoline demand recovery supported its forecasts of Brent and WTI crude prices next year at $53/bbl and $50/bbl, respectively. The report came days after Moody's Investor Service predicted US gasoline demand to revert to an "ongoing secular decline" after recovering despite higher personal car use as workers avoid public transport.
• S&P Global Platts Analytics estimates that global gasoline demand will fall by 10%, i.e. on average by 2.7 million b/d (MMB/D) in 2020; gasoil/diesel by 1.7 million b/d (down 6%). Although rebounding strongly in 2021, global gasoline demand was expected to average about 340,000 b/d lower next year than 2019 at 26.42 MMB/D, and as Brent crude heads towards $50 per barrel by end-2021 and WTI to $45 per barrel.
• Platts see Brent prices in the low-$40s per barrel in September, high-$30s per barrel for WTI, but as onshore global crude stock draws pick up by year-end, Brent is forecast to rise to $44/bbl and WTI at $41 in fourth quarter 2020.¹
• Gasoline cracks (gasoline vs. Dubai) were range-bound, with sentiment remaining mildly positive. A rebound in Indonesian demand has been the key driver for the improvement of the past few weeks, but there is additional support from the ongoing curtailment of operations amongst regional refiners, thus decreasing gasoline supply. Improved demand has saw Singapore light distillate stocks tumbled by 8% week-on-week to a six-month low of 13.6 million barrels. In the US, gasoline cracks rose ahead of possible disruptions to Gulf Coast refineries due to Hurricane Laura, though the impact now appears to be limited.
• Sentiment in the Asian gasoil/diesel market remains downbeat, as markets remain stuck in the recent cycle of weak demand and a closed arbitrage to Europe. There are signs of more refiners curtailing run rates in the face of weak margins.

FOREX:  Philippine peso appreciated week-on-week against the US dollar by P0.07 to P48.56 from P49.63 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 total year-to-date adjustments to stand at a net decrease of P3.92/liter for gasoline, P8.99/liter for diesel and P13.39/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.

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 World Oil Market Forecast as of 28 August 2020