WORLD OIL PRICES (June 15-19, 2020 trading days)
Dubai crude increased week-on-week by around US$0.10/bbl. MOPS gasoline and diesel have also increased by almost US$2.00 per barrel.
Reasons for the Adjustment
- On the supply side, the OPEC+ and allies’ virtual meeting held on 07 June 2020 had a deal of 9.6 million b/d (MMB/D) in collective crude oil production cuts for July, and is scheduled to ease back to 7.7 MMB/D starting in August, though a monitoring committee plans to meet monthly to determine if any changes are needed. Its next meeting is 15 July 2020.
- Also agreed was member-countries that overproduced must compensate for their excess by making extra cuts below their quotas in July, August and September. “The extra cuts, if fulfilled, could go a long way towards speeding the market's rebalancing, or provide the OPEC+ alliance some breathing room to relax quotas for the rest of its members”, market analyst Stephen Brennock was quoted by Platts. As a result, OPEC+ crude oil production could fall by about 1 MMB/D more to 10.6 MMB/D in July and August from May levels, based on plans submitted by Iraq and Kazakhstan, to institute deeper output cuts to make up for violating their quotas and loading schedules issued by fellow compliance laggards Nigeria and Angola.
- The Dubai crude complex as well remains broadly positive as markets continue to digest the impact of OPEC agreement reached on 07 June. While the one-month extension was widely expected, additional action on quota compliance has further supported the bullish sentiment in the oil market this week.
- According to Platts, the global oil market is slowly starting to rebalance as a result of production cuts and relaxing coronavirus lockdowns with global crude oil supply expected to settle at around 95.2.6 MMB/D by the end of 2020 and 99.5 MMB/D in 2021.
- On the other hand, Platts expects oil demand in 2020 to fall by 8.4 MMB/D to 94.1 MMB/D from 102.5 MMB/D in 2019, the largest decline in history, before recovering 101.6 MMB/D in 2021.
- Similarly, the International energy Agency (IEA) projects that while the oil market remains fragile, the recent modest recovery in prices suggests that the first half of 2020 is ending on a more optimistic note, as oil production cuts take effect while most countries are increasing mobility.
- A new gamechanger, however is the reported second wave of coronavirus lockdowns in Asia is being feared to potentially cap the demand upside. China reported 28 new coronavirus cases on 17 June that prompted Beijing to shut schools and cancel two-thirds of all flights into the country. Cases in Indonesia, the region's largest buyer of gasoline, soar past 41,000 as of 17 June, overtaking Singapore. New Zealand too has three new cases after weeks of zero infection1.
- If the resurgence of these succeeding lockdowns actually happens, then prices will start to decline again as the resulting decline in demand will fall even much lower than projections of the IEA and the planned production cut will be increased to cope and rebalance the decline in demand.
FOREX:Philippine peso depreciated week-on-week against the US dollar by P0.22 to 50.15, from P49.93 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 23 June 2020, the oil companies implemented a price increase in petroleum products. Gasoline has increased by P1.05/liter, P0.85/liter for Diesel and P0.30/liter for kerosene.
This brings the total year-to-date adjustments to stand at a net decrease of P5.67/liter for gasoline, P9.14/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