Oil Monitor as of 25 March 2020

Date published: March 26, 2020

WORLD OIL PRICES (March 16-20, 2020 trading days)

Dubai crude decreased further as it plunged week-on-week by almost US$5/bbl. MOPS gasoline and diesel decreased as well by about US$13/bbl and US$7/bbl, respectively, over the comparative period.

Reasons for the Adjustment

  • Dubai crude prices collapsed to four-year-ago level this week as global markets continued to respond to OPEC output concerns and the global coronavirus pandemic.
    • Saudi Arabia's Ministry of Energy directed Saudi Aramco to supply 12.3 million b/d of crude to the market, after production quota expires this March 2020 
    • Production will be 25% above current levels, as the kingdom shows no signs of backing down in its price war with Russia.
  • Since the three-year OPEC+ production cut agreement collapsed on March 6, Saudi Aramco has slashed its selling prices for crude exports and announced plans for a surge in production. The moves have contributed to a massive rout in crude prices, adding to the already weakened by the impact on demand of the coronavirus outbreak.
  • Platts stressed that current market is seeing a rare simultaneous instance of a global supply shock, due to the oil price war between Saudi Arabia and Russia, and a demand shock, due to the coronavirus pandemic, creating an unprecedented oil surplus that stretches storage capability to its limits.
  • South Korean refiners are shifting focus to Persian Gulf barrels, from US sweet crudes, as major Middle Eastern producers sweeten their offers in Asia following the breakdown in OPEC+ negotiations for deeper production cuts earlier this month.
  • Analysts have varied global oil demand forecast in the midst of the global measures to slow the spread of coronavirus pandemic.
    • Norway-based consultant Rystad Energy estimated global oil demand will contract by 2.8 million b/d, or 2.8%, this year.
    • Facts Global Energy estimated global oil demand would fall 1.3 million b/d in 2020.
    • S&P Global Analytics forecast on March 11 that demand would shrink by 960,000 b/d under a worst-case scenario.
    • The International Energy Agency on Match 9 forecast a contraction in global demand for 2020 of 90,000 b/d -- which would be the first shrinkage in consumption since the financial crisis in 2009.
  • For the first time since 2003, Asian gasoline fell to US$20 per barrel as regional supply continues to increase and demand dwindling amidst global measures to slow the spread of coronavirus pandemic.
    • Japanese gasoline stocks point to a glut, with stocks in the week ended March 14 rising 8.24% on week to 11.43 million barrels;
    • Further adding to supply-side pressure, Sinopec's 264,000 b/d Guangzhou refinery is expected to raise gasoline exports to around 20,000 mt in March from 15,800 mt planned for February.
    • More gasoline supply was seen Thursday heading toward Singapore, the region's largest oil trading hub, further highlighting a growing oversupply as regional demand continues to waver.
    • Data of Indonesia, the Southeast Asia's largest buyer of gasoline, also suggests faltering demand in the emerged near term attributed to the coronavirus outbreak.
  • Asian gasoil/diesel was seen supported early this week by news of refinery explosion in Malaysia's 300,000 b/d Refinery and Petrochemical Integrated Development, or RAPID. RAPID exports around 9-10 Medium-Range sized vessels of 10 ppm sulfur gasoil/diesel per month.
  • Traders noted that while Asian gasoil demand has been crunched due to a slowdown in regional economic activity, the supply outlook was being seen tighter due to refinery run cuts and leaner export volumes from north Asian countries.
  • A more optimistic outlook says that gasoil's varied uses would count as a stabilizing factor for the product. The middle distillate product that includes gasoil/diesel would be better able to weather through the current crisis, as compared to other refined oil products, Platts noted

FOREX: Philippine peso depreciated week-on-week against the US dollar by P0.44 to 51.16, from P50.72 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 their per liter rollbacks on March 21-24, 2020 by P3.00-P3.50 for gasoline and kerosene, and P2.00 for diesel.

Year-to-date adjustments stand at a net decrease of P12.75/liter for gasoline, P12.89/liter for diesel and P16.25/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

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