WORLD OIL PRICES (December 1-5, 2014 trading days)

Crude oil prices dipped further this week to as low as US$65/bbl, about 40 percent lower since it started to fall in June on concerns of weak demand and crude supply glut in the world markets. Prices were further weighed down particularly last week on reports of:

• Failure by OPEC to cut production. OPEC fueled the decline when it resisted calls by small OPEC-member-countries, in their 27 November 2014 meeting, to reduce production in order to boost prices;
• Slowdown of manufacturing activity in Europe and China. Europe's manufacturing industry stalled in November as factory activities in the eurozone's top three economies namely Germany, France and Italy fall. Similarly, China’s factory output contracted in the same month, the first time in six months.
• Cutback in 2015 forecast by Morgan Stanley for Brent crude, citing supply glut. Morgan Stanley reportedly cut its Brent forecast for 2015 and even 2016-2018. In the worst case scenario, the bank noted oil could fall as low as $43/bbl in the second quarter of next year, recovering to only $48/bbl in the third quarter.

However, oil prices were balanced by a dip in US crude stockpiles, which raised optimism that energy demand in the world's top crude consumer is increasing in view partly of the upcoming winter season.

On other news about crude, Saudi Arabia slashed its crude prices for Asian and U.S. buyers Thursday, a move which analysts believe is a stepping up on its battle for market share, a week after refusing to support OPEC output cuts. The report disclosed that the discounts on Saudi crude oil for Asian customers in January were the biggest since at least 2002, while prices were cut to the United States for the fifth month in a row.

For MOPS gasoline, sluggish demand in the region compounded with falling prices in the West dragged sentiment for gasoline in Asia-Pacific lower. On the other hand, fundamentals in Asia's gasoil/diesel market were supported by lower exports from China, less gasoil production by North Asian refiners in winter when kerosene production is maximized, and declining inventory levels in Singapore due partly to gasoil outflow to the west.

Overall, Dubai crude decreased week-on-week by about US$6.40/bbl. Similarly, MOPS diesel decreased by almost US$7.00/bbl and also gasoline by around US$8.50/bbl.

FOREX: Peso per US dollar rate appreciated by P0.21 to P44.72, from P44.93 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 07 December 2014, most of the oil companies implemented a price decrease of P2.25 for diesel and P2.50 for gasoline.

These price movements brought the total year-to-date net decrease to P12.13/liter and P10.74/liter for the respective products. LPG remained at a net decrease of P28.52/kg.

* RON 95

For more information, call the

Department of Energy:
Pricing: 840-2187
LPG: 840-2130
Fuels: 840-5669
SMS: (0915) 4469421
Email: oilmonitor@doe.gov.ph
Website: http://www.doe.gov.ph