WORLD OIL PRICES (November 10-14, 2014 trading days)

Crude oil prices slumped by about five percent this week, falling to four-year lows by the end of the week, with Dubai along with benchmarks Brent and WTI crashing below $80 a barrel. Analysts disclosed the following facts and insights as the reasons behind the recent price drop.

• U.S. oil production hit a new high-water mark. A recent U.S government data showed an estimated production of 9.06 million barrels a day of crude oil. Per record of the Energy Information Administration, the last time the U.S. produced 9 mil b/d of oil was 1986, when the monthly average in March of that year was 9.13 mil b/d. Analysts noted that considering the U.S. produced over 9 mil b/d for the first time in 30 years was bearish for the market.
• Increased stocks at the Cushing, Oklahoma. US' Energy Information Administration data revealed that stocks at the Cushing, Oklahoma, delivery hub for U.S. crude futures, rose 1.7 million barrels for the week ended Nov. 7. Gasoline stocks also surged 1.8 million barrels.
• Increasing expectation that OPEC won’t decide to reduce output at its meeting this month. The decline compounded losses stemming from comments by Saudi Arabia's oil minister, signifying a little will by the kingdom to cut output when the OPEC meets on 27 November. Kuwaiti oil minister Ali al-Omair also downplayed prospects for an OPEC output cut in the face of abundant global supplies, hoping the market will absorb surplus supplies. The 12-member group pumped 30.974 mil b/d in October, exceeding its output target of 30 million.

  Qatar expects to lower oil output but top oil exporter and OPEC's most powerful member, Saudi Arabia, has refrained from backing a cut, prompting speculation that it is more concerned with keeping market share than supporting prices. Saudi Oil Minister Ali al-Naimi stressed that “OPEC do not set the oil price. The market sets the prices".

Meanwhile, the Asian gasoline market continued to be weighed down by lackluster buying activity for December. Gasoline demand in Asia tends to wane during the Northern Hemisphere winter as the market shifts its focus to heating oil rather than motor fuel.

As for gasoil/diesel, Platts noted that the Asian market saw a spike in demand due to supply tightness as well as flurry arbitrage movements of ultra-low sulfur diesel from Asia and the Middle East to Europe. The supply tightness in Europe was triggered by a sharp drop in exports from the US due to refinery outages, strong demand in both Northwest Europe and the Mediterranean, and seasonal refinery maintenance of European refineries.

Overall, Dubai crude decreased week-on-week by US$2/bbl. Likewise, MOPS gasoline and diesel decreased as well by about US$2.70 and US$1.40 a barrel, respectively.

FOREX: Peso per US dollar rate depreciated by P0.09 to P44.89, from P44.98 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

Most of the oil companies implemented a price roll-back of P0.80/liter for gasoline, P0.50/liter for diesel and P0.35/liter for kerosene effective 18 November 2014.

Year-to-date, gasoline and diesel have a total net decrease of P7.34/liter and P8.48/liter, respectively.

* RON 95

For more information, call the

Department of Energy:
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SMS: (0915) 4469421
Email: oilmonitor@doe.gov.ph
Website: http://www.doe.gov.ph