WORLD OIL PRICES (30 December 2013 – 03 January 2014 trading days)

Crude prices generally decreased by about US$2 to US$3 a barrel last week versus the previous week in view of the following:

• Resolution of Libyan labor unrest.  Libyan El Sharara oil field with 330,000 b/d is expected to resume normal output early this month, which would soften demand.  Labor unrest has disrupted Libyan oil exports, cutting crude supplies to Europe and boosting global oil prices. Oil production in Libya has plunged to about 250,000 barrels a day from nearly 1.5 million in the face of demands from armed protesters for more regional autonomy and greater say over the distribution of oil revenues.
• Slowdown in Chinese manufacturing growth.  While a reading above 50 indicates growth, the recent data on HSBC China Manufacturing Purchasing Managers' Index that fell to 50.5 in December from 50.8 in November is also weighing on the market. 
• Stronger US dollar. Improving economy in the U.S. has prompted the Federal Reserve to begin winding down its stimulus program, which had propped up oil prices. However, the tapering of the stimulus program is leading to a stronger dollar, which makes commodities such as oil that are priced in dollars, less attractive to buyers using other currencies.

Nonetheless, some reports also outweigh on crude prices as investors anticipate for upbeat US stockpiles data and hopes for solid demand in the coming months.  Analysts believe that signs of recovery in the U.S. are expected to help revive other major global economies.

For Asian products market, Platts noted that gasoline sentiment was somewhat positive on expectations of a tighter regional demand-supply balance at the start of year 2014. The market has strong fundamentals in view of refinery maintenance coming up; thus, fewer barrels around on-spec for Middle East or Indonesia.  While the recent outage at Formosa's 540,000 b/d Mailiao refinery in Taiwan has taken out prompt supply from the market, it further noted that sustained strength in the East/West spread continues to encourage the flow of more Indian barrels to Singapore that could cap potential gains in the regional cracks.

On the other hand, the Asian gasoil/diesel market remained subdued over the week as many market participants have yet to return from their holidays.  Supply was deemed ample, as seen from the widening of the jet/gasoil re grade differential to over 60 cents/barrel earlier this week. The spread had reached a three-month high of $1.44/b on December 11 before crunching to minus 13 cents/b a week later. It has however, been widening since then mainly on the back of continuous gasoil supply flowing into Singapore from North Asia.

Overall, week-on-week Dubai decreased by US$1.65/bbl. MOPS diesel and gasoline decreased as well by US$1.66 and US$0.14 a barrel, respectively.

FOREX:  Week-on-week Peso per US dollar rate depreciated by P0.08 to P44.49 from P44.41 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 07 January 2014, the oil companies implemented the first price adjustment for the year i.e. a decrease on diesel and kerosene by  P0.45/liter  P0.25/liter, respectively. There was no movement for gasoline.

On 01 January 2014, the price of LPG also decreased by P7.65/kg (VAT inclusive).  It was due to the decrease in LPG Contract Price for January by US$170.50/MT from US$1,187.50/MT in December.

Year-to-date net increase stands at P4.68/liter for diesel and P3.59/liter for gasoline.

* RON 95

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