Oil Monitor as of 08 April 2020

Date published: April 8, 2020

WORLD OIL PRICES (March 30-April 03, 2020 trading days)

Dubai crude decreased week-on-week by about S$3/bbl. MOPS gasoline and diesel decreased as well by more than US$1/bbl and US$2/bbl, respectively, over the same comparative period.

Reasons for the Adjustment

  • OPEC+ alliance to cut production. Saudi Arabia called for an "urgent meeting" of the OPEC+ alliance and other producers to negotiate a deal on output cuts that could stem the coronavirus-induced freefall in oil prices following the tweet of US President.
  • Oversupply encouraging inventory build.  With Saudi Arabia and Russia in a pricing war to flood the market with cheap crude, and refiners cutting runs on low demand, the crude contango has widened, encouraging global inventory builds.
  • US needs additional oil storage.  After Democrats in Congress blocked efforts to buy US crude for the Strategic Petroleum Reserve, the Department of Energy announced Thursday that it was making 30 million barrels of space available for US producers to store crude. The DOE said it would make an additional 47 million barrels of storage space, accounting for the remainder of its total capacity, available at a later date.
  • Saudi crude going to Europe.  Around 800,000 b/d to 1 million b/d -- or 10%-15% -- of Saudi crude exports has recently traveled to Europe, with France, the Netherlands, Poland, Greece and Spain making up the key demand hubs, according to S&P Global Platts estimates.
  • Weak oil demand in North Asia.  Several refiners in North Asia declined offers from Middle East producers for additional crude volumes to their allocated April term barrels, despite low oil prices. Japanese refiners are still mulling whether to increase crude oil purchases from Saudi Arabia and the UAE for May loading programs, after seeing no room for additional intake from the Middle East for April.

Gasoline

  • Lockdown in Indonesia prior to the upcoming Muslim holy month of Ramadan, when gasoline demand typical peaks, hurt the Asian gasoline complex.  Indonesia is the largest buyer of gasoline in Southeast Asia.
  • Gasoline exports from Singapore over March 26-April 1 of grades below 90 RON, between 90 RON and 97 RON, and above 97 RON fell 53% week on week to 259,910 mt, per Enterprise Singapore data.
  • US-EIA data of gasoline stocks surge in the week ended March 27, climbing by 7.5 million barrels, to 246.81 million barrels, more than analysts’ anticipated build of 3.6  mil b/d.
  • On the demand front, West Africa, which was a viable arbitrage route in mid-March is lately seen of faltering demand as more countries become subject to curfews and lockdowns.
    • Nigeria is the leading consumer in West Africa of road fuel, typically using around 1 million- 1.25 million mt of gasoline a month.
    • State-owned Nigerian National Petroleum Corp. said two days ago that the country had adequate stocks of gasoline to last for over 60 days.

Gasoil/diesel

  • Asian middle distillate complex remained bearish on ample supplies in the region.
  • The regional domestic demand remained well below normal levels.
    • More supply is observed being diverted into Southeast Asia and Singapore, from the Persian Gulf and India.
    • Some incremental volumes of gasoil being offered into the spot market are “most likely from their domestic demand, which has been cut back" due to the coronavirus pandemic.
      • In India, Bharat Petroleum Corp. Ltd. and Nayara Energy offering up to 110,000 mt of gasoil for loading over April
      • South Korea offered two medium range cargoes of jet fuel and five MR cargoes of 500 ppm sulfur gasoil for loading in May.
  • However, gasoil cracks to crude were still managing to hold on to some strength. "It is partly because the market anticipated regional run-cuts and the spring refinery turnaround in mid-April-June, giving some support to the market" a refiner quoted.

FOREX: Philippine peso appreciated week-on-week against the US dollar by P0.21 to 50.86, from P51.06 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

Oil companies implemented a price decrease of P0.35/liter for gasoline, P0.70/liter for diesel and P0.75/liter for kerosene on April 7-8, 2020.

Year-to-date adjustments are now at a net decrease of P15.07/liter for gasoline, P14.09/liter for diesel and P18.95/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

Pages