WORLD OIL PRICES (June 27-July 1, 2016 trading days)

Oil prices initially dropped early this week after Britain voted to leave the European Union that sparked a sharp selloff in global markets, and amid heightened concerns about the global economy and a winding path ahead for Europe. But views were mixed on its likely long-term market impact.

The decline continued on Tuesday after Bank of England governor Mark Carney signalled a likely monetary stimulus due to the economic hit from Brexit. Oil prices later stabilized as market analysts predicted that oil is not directly affected by Brexit. The hit to the UK and European economies is seen as negative demand, as it bears the inflationary impact on the dollar from the tumbling pound. A stronger dollar weakens demand for oil and commodities that are sold in the US currency on international markets.

Oil prices however picked up by more than a dollar last Wednesday on reports of looming strike by Norwegian oil workers that threatened to cut output from the biggest North Sea producer. Crisis in Venezuela, where oil producers and refiners were struggling to keep output up due to power outages and equipment shortages, also supported the price up-tick.

Notwithstanding reports of tightening crude supply from Venezuela and Norway, there are concerns that a looming refined products glut especially in Asia might spill back into the crude market as refiners cut output and orders of their main feedstock, crude.

Platts disclosed of a largely unchanged gasoline market fundamentals in Asia, as supply continued to outstrip demand, which causes the prompt July/August swap spread deeper into contango. However, the closed arbitrage window from Europe and India to Asia should help support the market as cargoes move to the US ahead of summer demand. The rising stocks in the US helped weakened the Asian gasoline market. The US-Energy Information Administration reported an increase in US gasoline stocks for the week ended June 24 by 1.367 million barrels. The stock build came as a surprise after analysts had predicted a decline of 600,000 barrels.

On the other hand, Platts predicted the Asian gasoil/diesel market to likely remain tight for the rest of July. But it may taper off towards the end of the month when fresh supply emerged from India and China. Market sources anticipated demand to remain relatively stable in July, with some pick-up as the monsoon season and the seasonal fishing ban in China concluded.

Overall, Dubai crude decreased week-on-week by almost US$1/bbl. MOPS gasoline and diesel decreased as well by nearly US$2.40 and US$0.80 per barrel, respectively.

FOREX: The peso per US dollar rate in the same comparative period depreciated by P0.48 to P47.01/US$ from P46.53 in previous week.

Other recommended reference site: https://www.aip.com.au/pricing

DOMESTIC OIL PRICES

Effective 5 July 2016, most of the oil companies implemented a price rollback of P0.60/liter for gasoline and P0.20/liter for kerosene. There was no movement in the price of diesel.

LPG also fell by P2.40/kg effective 01 July 2016 due to the US$49/MT decrease in LPG Contract Price this month to US$305/MT.

Currently, the year-to-date total adjustment for gasoline is net increase of P2.37; diesel, net increase of P5.40; LPG at net decrease of P7.80.

* RON 95

For more information, call the

Department of Energy:
Pricing: 840-2187
LPG: 840-2130
Fuels: 840-5669
SMS: (0915) 4469421
Email: [email protected]
Website: https://www.doe.gov.ph