WORLD OIL PRICES (June 22-26, 2020 trading days)

Reasons for the Adjustment

• On June 24, the International Monetary Fund (IMF) revised down its economic projections for 2020-2021. It has now reduced its 2020 contraction from the 3% per its April outlook to a decline of 4.9%, and its 2021 rebound of 5.8% has been reduced to 5.4%. They say that rising coronavirus cases in parts of the world could further dampen demand expectations moving forward.
• The IMF oil price (average of WTI, Brent and Dubai) assumption was raised by 32 cents/b or 0.9%; its oil price assumption for 2021 was reduced by 94 cents/b or 2.5%.
• Citigroup Global Head of Commodities Research Ed Morse said that global oil prices will likely continue to rebound over the coming 18 months to over $60/b, driven by OPEC+ efforts to curb supplies and the near-term loss of US shale oil as producers react to the recent downturn.
• Citi sees Brent crude futures averaging $48/b in the fourth quarter of 2020, $59/b in 2022 and $55/b in 2023, as more non-OPEC oil supplies comes on stream in response to the firmer prices.
• Neil Atkinson, Head of Oil Markets Division of the International Energy Agency (IEA) sees the second half of 2020 and 2021 as "supportive of higher prices" due to tighter oil market fundamentals, which are expected to erode the massive level of global oil builds during March and April.
• The IEA sees global oil demand growing by 4 million b/d (MMB/D) more than supply next year, which would mean shifting some of the huge oil stock overhang that has built up during the pandemic.
• Asian crude demand is set to rise over the next few months as refiners increase runs to meet recovering product demand. But refining margins remain severely weak, and a drop-off can be expected in recent strong Chinese demand from stock building and independent refiners. ⁽¹⁾
• The recent stability is indicative of global oil balances moving from huge surpluses in April/May to something balanced by June/July. Balances will move towards stock draws sometime during 3Q 2020, but the record levels of crude and products in storage will work against much further upside for prices.⁽²⁾
• Forecast for Brent and Dubai prices to remain within a relatively narrow range for the remainder of the year.^₍₃₎
• Fresh Asian supply weighed on fundamentals in the regional gasoline market, keeping crack spreads (Gasoline vs Dubai) suppressed in light of firming regional appetite for motor fuel.
• Fundamentals in the Asian gasoil/diesel market were seen largely steady, as supply-side factors maintained an upward pressure on the middle distillate, bolstering prices.

FOREX: Philippine peso appreciated week-on-week against the US dollar by P0.10 to 50.06, from P50.15 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

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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