WORLD OIL PRICES (December 28, 2020-January 01, 2021 trading days)

Reasons for the Adjustment

• The month of December ended a muted crude market with year-end holidays curbing last minute buys, further aided by Asian refiners opting for cheaper arbitrage¹ barrels from the West.

• The resurgence of COVID-19 cases in the West and its throttling effect on oil demand gave added concerns to the overall demand outlook; however, the roll-out of vaccines could help check the spread of the virus and eventually lift flagging demand.

• In terms of supply, OPEC+ is set to increase by 500,000 b/d in January, with a possible further 500,000 b/d increase the following month. The bulk of increased OPEC+ supply is expected to eventually be directed to Asia.
  • Analysts see China as the driving force for the sour crude market. Platts report stated that China's Ministry of Commerce has issued 118.52 million metric tons of crude import quotas to 43 qualified independent and non-major state-owned refineries in the first batch for 2021 - up 19% compared to the same period in 2020.
  • Platts however, maintain a relatively modest outlook for Chinese crude imports in 2021. The country’s crude imports are accounted to total 10.95 million b/d (MMB/D) for 2020, and is projected to grow by 46,000 b/d or 0.4% to 11 MMB/D in 2021.

• The Asian gasoline market extended rebound on Dec. 30 to the New Year's Eve on further support from the US gasoline-Brent crack spread following a larger-than-expected draw in US inventories.
  • Per US-EIA data on December 30, total US gasoline inventories declined 1.19 million barrels (MMB) during the week ended Dec. 25 at 236.56 MMB, reportedly the lowest since mid-October. It was greater than the 718,000 estimated by the American Petroleum Institute.
  • The stock decline was contrary to Platts projection of 2.3 MMB build as Apple mobility data indicated US driving activity in the week ended Dec. 25 fell nearly 3% from prior week.

• Improvement in gasoil/diesel cracks (crude vs. gasoil) in the past three months has been noted to be slow but in consistent pace, in view largely to the effectiveness of Asian refiners in curtailing run rates while demand continues to recover.
  • Industry sources noted of stable regional demand helping to provide some support to the Asian gasoil/diesel complex.
  • The steadiness in the gasoil market also comes even with higher inflows of gasoil to Asia from India and the Middle East.
  • Market participants said the flows to Asia have come amid poor demand in Europe, with tightening restrictions being implemented to curb the spread of the coronavirus as medical conditions deteriorate in the UK, Germany and the Netherlands.

FOREX: Philippine peso depreciated week-on-week against the US dollar by P0.01 to P48.07 from P48.06 in previous week.

Other recommended reference sites:
    • https://www.aip.com.au/pricing
    • https://www.indexmundi.com/commodities/?commodity=crude-oil-dubai
    • https://www.quandl.com/data/ODA/POILDUB_USD-Dubai-Crude-Oil-Price

DOMESTIC OIL PRICES

For the updated prevailing retail pump price, please browse this link: https://www.doe.gov.ph/price-monitoring-charts?q=retail-pump-prices-metro-manila.

_______

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