WORLD OIL PRICES (Aug 11-15, 2014 trading days)

Dubai crude, along with other crude benchmarks continued to fall despite fears that conflicts in Ukraine and Iraq would inflate prices. According to the International Energy Agency (IEA), the weakening demand is helping to keep oil prices from spiking, considering that violence in oil producing countries around the world is keeping a substantial portion of oil supplies offline. Around 4 percent of global oil supplies are offline because of conflict.

IEA’s recent oil market report disclosed that oil demand for 2014 will be lower than previously expected, prompting its forecast to downgrade by 180,000 barrels per day for the year. In the second quarter, global demand only increased at an annualized rate of 700,000 barrels per day, the slowest pace in over two years.

Oil producing countries that have been in political violence include Libya, Nigeria, Iran and Iraq. Libya has been in a state of political crisis for over a year, which has kept most of its 1.6 million barrel-per-day capacity offline since the summer of 2013. Nigeria has experienced sabotage to key pipeline infrastructure, knocking some of its production offline. Iran has been under western sanctions since 2012, which have capped Iranian oil exports at 1 million bpd – about 1.5 million bpd lower than pre-2012, and Iraq, despite continuing crisis and chaos, has remarkably kept its output fairly steady.

About the Asian market, Platts noted of continued ample supply of gasoline and little fresh demand from the region. The spike in supply is due to the return of several refineries in the region from planned maintenance. In addition, demand had declined as it was the end of the peak buying season in Asia. Despite these however, traders are optimistic about the potential for the Asian market to rise, given the current strength in US and European benchmarks.

On the other hand, Asia and Middle East gasoil/diesel market remained oversupplied as demand failed to absorb the cargoes available in the region. Abundant supply kept market sentiment weak even as the region saw a slight uplift in demand. Exports from Thailand, Taiwan and India as well as cargoes from the Middle East were contributing to the supply glut in the region, while demand is struggling to keep pace.

Overall, Dubai crude decreased by US$1.50/bbl. MOPS diesel and gasoline likewise decreased by about US$1.40/bbl and US$0.20/bbl, respectively.

FOREX:  Peso per US dollar rate depreciated week-on-week by P0.01 to P43.83, from P43.82 in the preceding 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 today, 19 August 2014, most of the oil companies implemented a P0.40/liter rollback for diesel. No adjustments were effected for gasoline and kerosene.

Year-to-date total adjustment for diesel stands at a net decrease of P3.00/liter while gasoline remained at a net decrease of P2.34/liter.

* RON 95

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