Oil Monitor as of 21 July 2020

Date published: July 21, 2020

WORLD OIL PRICES (July 13-17, 2020 trading days)

Dubai crude has decreased week-on-week by around US$0.10/bbl. Both MOPS gasoline and diesel have also decreased: gasoline by almost US$0.60 per barrel and diesel by nearly US$0.20 per barrel.

Reasons for the Adjustment

  • OPEC+ concluded a monitoring committee meeting on 15 July as expected. Despite some speculations to the contrary, the group confirmed it will reduce production cuts by 1.9 million barrels per day (MMB/D) in August as scheduled. However, the meeting also concluded the 840 thousand barrels per day (MB/D) of additional cuts by 13 countries that deemed to have overproduced in May and June, most notably Iraq.
  • Global Platts Analytics now forecasts supply from OPEC+ to rise 1.3 MMB/D overall in August vs. the official 1.9 MMB/D quota change. As a result, Brent price is seen to sustain upward movement above $40/bbl ahead of the August supply rise. It shows a firm degree of confidence from the market in the current OPEC+ actions, Platts added.
  • The OPEC+ group’s collective production is projected to further grow by 2.1 MMB/D between September and December, to cap prices and curtail higher-cost supply. However, market analyst noted that huge-producers Saudi and Russia is seen to have a tempting lever control if they want to push crude prices closer to US$50/bbl. OPEC+ monitoring committee is set to meet again to assess market development on the 18th August.
  • With the current developments, the International Energy Agency (IEA) Executive Director Fatih Birol opined that global oil markets are rebalancing, projecting crude prices in the coming months to stay at US$40/bbl level.1
  • Meanwhile, Bank of America Merrill Lynch described global oil demand as “on the mend” but the recovery differs between developed markets and emerging markets. Most developed countries (outside of the US) along with China are past their peak of COVID-19 cases. The demand in these markets is rebounding quickly while the virus is still spreading in emerging markets.2
  • Some analysts are of the opinion that the rolling back of OPEC+ cut was unlikely to result in an immediate rise in crude throughput and oil products output due to the fragility of the global fuel demand recovery. However, others remain optimistic, despite the challenges presented by the rising cases of infections.
  • The Asian gasoline market slid further at the end of the trading week on 17 July as more evidence of heavy supply in the region emerged, with Singapore's commercial onshore light distillate stocks staying above the 16 million barrels mark for the second consecutive week in light of a marginal drawdown.
  • On the other hand, improving regional demand against a backdrop of tight supply owing to curtailed production continues to support sentiment in the Asian gasoil/diesel market.

FOREX:

Philippine peso depreciated week-on-week against the US dollar by P0.02 to 49.49, from P49.47 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

Effective 21 July 2020, the oil companies implemented a price decrease of P0.10-P0.20 per liter for gasoline and increase of P0.15/liter for kerosene. No movement on the price of diesel.

This brings the total year-to-date adjustments to stand at a net decrease of P5.07/liter for gasoline and P12.84/liter for kerosene. Diesel remained at a net decrease of P8.54/liter.

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 Reuters.com, 16 July 2020
2 Oil price.com 17 July 2020

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