WORLD OIL PRICES(WORLD OIL PRICES (December 8-12, 2014 trading days)

The price of crude oil took another plunge during the week on reports of an increase in US oil inventories and lower crude demand projections by the world's three leading energy bodies for 2015. Dubai dropped down to US$60/bbl last Friday along with Brent and WTI that slipped toward US$62 and US$58 a barrel, respectively. Analysts believed the price decline to five-year lows is mounting evidence that global supplies are far outstripping demand. It coincides with cooling demand in China and Europe.

The US Energy Department reported a surprise increase in U.S. crude supplies of 1.5 million barrels, as opposed to analysts expectation of 2.2 million barrels decline in the week ended December 5, 2014. Gasoline stocks also reportedly increased more than expected.

On demand projection, the Paris-based International Energy Agency (IEA) saw growth in world oil demand next year to fall below the critical figure of one million barrels per day, reaching a total of 93.3 mil b/d. The agency has also warned of a 300 million barrels increase that has built up in the storage tanks across Europe and North America.

The estimate by the Energy Information Administration (EIA) was even more depressed, reducing its forecast demand growth to just 880,000 b/d, or 92.8 million barrels a day (mil b/d). Finally, OPEC reportedly shaved off 70,000 b/d to 92.26 mil b/d, accounting for a smaller share of 28.9 mil b/day next year versus 29.4 mil b/d this year. The cartel's official production target is 30 mil b/d.

As regards the products market in Asia, Platts disclosed of ample supply in the Asia and Middle East gasoline market, which kept sentiment weak. Healthy refining margins keep production steady but regional demand could not soak up the available supply. Adding to the weakness were reports that Indonesia's Pertamina has deferred a number of end-December-loading 88 RON cargoes for January. The market was also led lower by a weaker market in the US and Europe. In Asia, China was seen to have high inventories of gasoline at teapot refineries following weak demand from the automobile sector.

Meanwhile for the gasoil/diesel, Platts noted that the market could turn bearish in the months ahead. The current tightness in prompt-month cargoes could ease early next year, though overall market fundamentals had not changed much with ample supplies, which is still a problem. The prompt-month tightness is more from China’s exports reduction due to seasonally tight demand for marine gasoil in Shanghai, as major suppliers met their annual quotas.

Overall, Dubai crude decreased week-on-week by about US$5.80/bbl. Similarly, MOPS diesel decreased by US$4.90/bbl and gasoline by US$6.10/bbl.

FOREX: Peso per US dollar rate appreciated by P0.15 to P44.57, from P44.72 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 decrease of P1.75/liter for gasoline, P1.55/liter for diesel and P1.80/liter for kerosene effective 14 December 2014.

These price adjustments brought the year-to-date net decrease to P12.49 for gasoline and P13.68 for diesel.

* RON 95

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