WORLD OIL PRICES (December 11-15, 2023, trading days))
The week-on-week price of Dubai crude has decreased by around $2.00/bbl. Similarly, MOPS gasoline, diesel and kerosene have also decreased by about $0.90, $1.20, and $2.80 per barrel, respectively.
Reasons for the Price Adjustment1
This week’s crude oil market has been marked by varied demand projections and significant monetary policy developments that caused the price up-tick in early trading days of the week. Nonetheless, crude prices remain under pressure on demand worries and concerns over surplus supply as it receded back as the week ended.
Specifically, the following were reported to have caused the week’s crude price up-tick:
- Larger than expected US inventory draw, weaker dollar and US Federal Reserve struck a more dovish tone and signaled the probability of upcoming rate cuts.
- US-EIA commercial crude oil inventory data declined by 4.26 million barrels to 440.77 million barrels in the week to Dec. 8, about 1.6% below the five-year average for this time of year. The fall in inventories was attributed to steady refinery demand and ad valorem tax pressures.
- The upside was further supported by concerns regarding the security of oil supply from the Middle East following reports of an attack on a tanker in the Red Sea.
- For the Asian gasoline market sentiment remained mixed amid concerns that the length heading to Asia could outstrip regional demand.
- However, the downward sentiment could be moderated by lower exports from China ahead of Lunar New Year festivities early next year due to higher domestic demand.
- On gasoil/diesel fundamentals were seen improving slightly although regional buying activity remained sluggish.
- Amid the calm, traders were keeping a keen eye on concerns emerging from the Middle East. The Yemen’s Houthi rebels have scared off some of the world’s top shipping companies and oil giants, effectively rerouting global trade away from a crucial artery for consumer goods and energy supplies that is expected to trigger delays and rising prices.
FOREX: The week-on-week average of Philippine peso depreciated versus the US dollar by P0.35 to P55.69 from P55.34 in previous week.
DOMESTIC OIL PRICES
Effective 19 December 2023, the oil companies implemented a decrease in the price of kerosene by P 0.85/L while diesel has increased by P0.10/L. There was no price movement on the price of gasoline.
Due to these price movements, the net increase for the entire year for diesel stood at P3.95 per liter while gasoline remains at P11.00 per liter. Kerosene resulted in a net decrease of P0.31/L.
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1 Asia-Pacific Weekly Recap 15 December 2023 by S&P Global Commodity Insights.