Oil Monitor as of 18 August 2020

Date published: August 19, 2020

WORLD OIL PRICES (August 10-14, 2020 trading days)

Dubai crude has increased week-on-week by almost US$0.50/bbl. MOPS gasoline and diesel have also increased: gasoline by around US$2.00 per barrel and diesel by nearly US$0.30 per barrel. 

Reasons for the Adjustment

  • Global demand recovery slowed in July to 1.2 million b/d after strong month-on-month growth of nearly 6 million b/d in May and 5.6 million b/d in June. Overall H1 of 2020 turned out to be better than expected because of China (May and June), India (June) and Western Europe. However, growth in H2 2020 will be slower where both China and India, the twin engines of growth in Asia, demonstrated a demand decline in July over June. On an annual basis, global oil demand is seen to contract by 8.2 million b/d in 2020 on the back of a GDP contraction at 3.7%, down to 94.3 million b/d from 102.5 million b/d in 2019.1 
  • With the OPEC+ agreement to taper production cuts, global oil supply is on track to increase by 4.5 million b/d through August, and another 3 million b/d by end-2020.  But for the year, global oil supply is forecast to contract by 6.8 million b/d in 2020. 
  • Several refiners in Asia have reduced demand for sour crude due to lackluster cracking margins.  While Saudi Aramco had lowered the September official selling prices for its Asia-bound crude oil grades by 30 cents/b to 60 cents/b, the move was not enough to uplift buying interest, Platts noted.  “Saudi’s official selling prices (OSPs) are still too high”, causing a weaker refining margins and could further slash run rates of refineries in Asia.  
  • The PSPC’s Tabangao refinery closure highlights the ongoing struggles facing the Asian refining sector.  Asia is seeing worse refining margins in comparison to Europe and the US. S&P Platts Analytics calculation of Singapore cracking margins vs Dubai have averaged minus $1.76/b so far in 2020 – a sharp decline from $1.35/b in 2019 and $3.34/b in 2018. While crude prices continue to see steady gains, the Dubai linked crude complex continues to show signs of weakening.2
  • On the product side, global gasoline and gasoil/diesel demand is expected to fall by 2.7 million b/d (-10%) and 1.7 million b/d (-6%), respectively, in 2020. On the other hand, kero/jet demand is forecast to have a bigger percentage drop, down by 2.4 million b/d or 30% compared to 2019, as consumer confidence on air travel is set to stay low in the absence of a vaccine.
  • The International Energy Agency as well as OPEC trimmed their 2020 oil demand forecasts this week.  Thus, oil prices are projected to lag behind demand recovery from Covid-19 pandemic lockdowns, while increasing supply overshadow optimism of falling crude and product inventories3.

FOREX:  Philippine peso appreciated week-on-week against the US dollar by P0.15 to P48.93 from P49.08 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, 18 August 2020.  Gasoline has an increase of P0.60 per liter and diesel by P0.10 per liter. No movement has been effected on the price of kerosene.  

This brings the total year-to-date adjustments to stand at a net decrease of P4.17/liter for gasoline, P8.69/liter for diesel and P13.04/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 Oil Market Forecast by S & P Global Platts 
2 Asia Pacific Weekly Recap, 14 Aug 2020, S & P Global Platts
3 Reuters.com

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