WORLD OIL PRICES (May 18-22, 2020 trading days)
Dubai crude increased week-on-week by about US$4.50/bbl. MOPS gasoline and diesel increased as well by about US$5 and US$6per barrel, respectively.
Reasons for the Adjustment
- The OPEC+ alliance, Russia and nine other allies’ agreement to implement the biggest coordinated production cut in the market's history at 9.7 million barrels per day (MMB/D) have started to take effect on in May resulting to an uptick in price.
- Saudi Arabia Energy Ministry announced a voluntary additional 1 MMB/D output cut beginning June 1, on top of the 3.21 MMB/D as previously committed for May and June, under the OPEC+ cut deal. It would bring Saudi’s output cut to around 4.21 MMB/D from the April production level of 11.7 MMB/D. The total OPEC production cut for June would increase to around 8.5 MMB/D.
- The seriousness of Saudi Arabia’s determination to rebalance the market can no longer be questioned with the decisive implementation of the supply cut followed by Russia and other core members, UAE and Kuwait.
- Outside of OPEC+, contributions have also proven supportive with notable crude oil reductions from US (1.7 MMB/D), Canada (1 MMB/D), Norway (250 thousand barrels per day [MB/D]), and Brazil (200 MB/D).
- As of 15 May, more than 2.2 MMB/D of US oil production has been shut in response to low prices and weak demand, according to US Energy Secretary Dan Brouillette. It indicates a significant increase in projected US shut-ins. The latest data released on May 20 by US Energy Information Administration showed US production at 11.5 MMB/D, down 1.6 MMB/D from March 13. S&P Global Platts Analytics data shows US production down 1.7 MMB/D.
- Global oil demand may struggle to fully bounce back from the COVID-19 pandemic any time soon, but will likely be constrained more by the pace of economic recovery, according to BP's chief economist Spencer Dale. “A shift to more home-based working, a sharp drop in business, travel and other permanent changes in energy use will result in a major hit to near-term oil demand”.
- While refineries in much of Asia are at reduced run rates, the early recovery in Chinese crude buying has been a key pillar of support. Spot prices of Russian crude-ESPO (a favourite of Chinese independent refiners) surged back into a premium of $2.50/Bbl vs. Dubai from a low of minus $4.75/Bbl a month ago. Platts Analytics estimates about 4.2 million barrels (MMB) of crude was drawn out of Saudi Aramco’s Okinawa storage facilities for shipment to China in April even as volume demand by other Asian buyers came to a halt.
- The broader rally in crude markets was mirrored in the Asian sour crude markets, with many key indicators trending back to more normal ranges. With OPEC+ supply cuts set to deepen in June, prices of the Dubai crude complex seem likely to continue to increase on recent momentum.
- This week, the three major global benchmarks Brent, Dubai, and WTI Cushing breached above $30/bbl for the first time since March 13. It is also just one month since the depths of the WTI Cushing collapsed to negative $37/bbl on April 20.
FOREX: Philippine peso depreciated week-on-week against the US dollar by P0.33 to 50.72, from P50.39 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 26 May 2020, the oil companies implemented an increase in petroleum products P1.75/liter for gasoline P2.10/liter for diesel and P2.65 per liter for kerosene.
This brings the total year-to-date adjustments to stand at net decrease of P9.52/liter for gasoline, P12.44/liter for diesel and P16.24/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