WORLD OIL PRICES (November 24-28, 2014 trading days)

Crude oil price benchmarks decreased this past five days by an amount ranging from US$3 to US$9 a barrel. The biggest drop happened by the end of the week after Gulf oil producers, led by Saudi Arabia, reached a consensus not to cut oil production. The OPEC conference held 27 November 2014 decided to maintain the production level of 30 million barrels a day, as agreed in December 2011 in the interest of restoring market equilibrium.

Oil prices had been under pressure ahead of the meeting, but the subsequent sharp dive of Brent by about US$6/bbl was the largest since 2011. Analysts believe the decision was not fully priced-in yet. Given market skepticism that recent price levels are low enough to substantially slow U.S. output growth, analysts expect price levels to drop below US$70/bbl for Brent and even lower for WTI.

Another factor that has driven oil prices lower was the Energy Information Administration’s (EIA) report on U.S. crude inventories, which rose by 1.9 million barrels last week, higher than analysts' expectations for an increase of only 467,000 barrels.

As regards the products market in Asia, gasoline market stayed upbeat as spot prices were supported by supply constraints in December, following an outage of a gasoline-making secondary unit at Formosa Petrochemical's refinery in Mailiao, Taiwan. The outage at the refinery has helped prop gasoline sentiment in Asia since the start of the week, on concerns that term gasoline barrels loading in December could be pushed to January. Meanwhile, Indonesia’s imports in December may fall from the record high of November as domestic gasoline production returns. Indonesia is the region's largest gasoline importer.

On the other hand, outright Asian gasoil/diesel prices, which are tracking crude lower, are expected to draw some buyers back into the market. Platts further noted that Singapore 500 ppm sulfur gasoil is currently hovering around 4-year lows, dragged down by the international crude oil, following news of OPEC maintaining its output ceiling of 30 million b/d into next year. Medium and high sulfur gasoil within the region remained oversupplied, while the previous tightness on 10 ppm-ultra-low sulfur diesel is starting to ease off amid healthier supply.

On the other hand, Platts stressed that the medium to high sulfur Asian gasoil/diesel market is supported by the emergence of spot demand from East Africa and Sri Lanka. Further buying support is expected from Iran. The country is planning to resume gasoil imports temporarily to feed its power plants this winter, as natural gas consumption by Iranian households is expected to rise during this period (Zagros basin in the west experience severe winters with below zero average daily temperatures and heavy snowfall). On the supply side, gasoil exports from Japan have eased as the country minimizes gasoil production and maximizes kerosene production amid a wide regrade and to stockpile the heating oil for winter.

Overall, Dubai crude decreased week-on-week by about US$1.20/bbl. Similarly, MOPS diesel decreased by US$1.40, while gasoline had a marginal decrease of US$0.06/bbl.

FOREX: Peso per US dollar rate appreciated by P0.07 to P44.93, from P45.00 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 02 December 2014, most oil companies effected a P0.50/liter decrease for diesel. There was no movement for the price of gasoline.

LPG companies also implemented a P1.00/kg rollback effective 01 December 2014 due to a decrease in LPG Contract Price by US$39 to US$564/MT, from US$603 last month.

Diesel price rollback resulted to a year-to-date net decrease of P9.88/liter while gasoline remained P8.24/liter. Currently, LPG has a total net decrease of P28.32/kg.

* RON 95

For more information, call the

Department of Energy:
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LPG: 840-2130
Fuels: 840-5669
SMS: (0915) 4469421
Email: oilmonitor@doe.gov.ph
Website: http://www.doe.gov.ph