WORLD OIL PRICES (July 1-5, 2013 trading days)

Oil prices sustained increases last week on concerns about possible disruptions to Middle East supplies and signs of an increase in U.S. demand for fuel.

World traders were worried that political upheaval in Egypt could slow the flow of oil from the Middle East to world markets. While Egypt is not an oil producer, its control over Suez Canal, one of the world’s busiest shipping lanes, gives it a crucial role in maintaining global energy supplies. According to US-DOE’s Energy Information Administration, about 2.24 million barrels a day of oil are being shipped to Europe and North America through the canal and the Suez-Mediterranean Pipeline from the Red Sea. The Middle East accounts for about 35 percent of global oil output in the first quarter of 2013, as disclosed by the International Energy Agency.

Oil markets are interconnected, and since much of the said volume that pass through the Canal are heading to Europe, a supply drop anywhere in the world leads to higher prices globally.

The US–DOE inventory report also supported the week’s price up-tick, as it showed that crude supplies fell by 10.3 million barrels from the previous week, more than three times the drop that analysts had expected. Although the drop was likely due to reduced supplies from Canada because of a temporary pipeline shutdown, it also attributed to increased demand from refineries.

Meanwhile, Platts noted of a price increase in gasoil/diesel over the period supported by uptick in crude prices. However, Asian gasoil market is foreseen to be weakening in the near term, with surplus supply coming from China and India and waning demand from recent major buyers Saudi Arabia and Indonesia.

On the other hand, gasoline remains bullish in the prompt market because of supply crunch. But Platts further expressed that the market may not have the ability to sustain strength after July as unplanned shutdowns in India and Malaysia and strong Ramadan demand in Indonesia will soon be over.

Overall, Dubai crude increased week-on-week by about US$1.50 per barrel. MOPS gasoline and diesel also escalated in the same period by about US$2.50 and US$2.00 a barrel, respectively.

FOREX: Peso appreciated against the US dollar by P0.14 to P43.33 last week, from P43.47 in previous week.

Other recommended reference sites:
(1) http://www.aip.com.au/pricing (2) http://www.med.govt.nz/ers/oil_pet/prices/prices.html

DOMESTIC OIL PRICES

Effective 9 July 2013, the oil companies implemented an increase of P0.60/liter for gasoline, P0.45/liter for diesel and P0.40/liter for kerosene.

The year-to-date net increase in gasoline and diesel rose to P1.80 and P1.48 per liter, respectively.

LPG stood at a year-to-date net decrease of P6.48/kg.

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: http://www.doe.gov.ph