AFTER last week’s increase, oil prices are down anew as global crude costs dropped due to weak economic figures from China and the rapidly filling crude storage in the United States.
According to the Department of Energy (DOE), the latest average Manila price per liter of gasoline (RON95) is at P40.75, diesel at P30.48 and kerosene at P29.32. The last time current gasoline prices were at this range was in July 2016.
Seaoil adjusted the per liter prices of gasoline by P0.55, diesel by P1.15 and kerosene by P0.60.
Phoenix and PTT cut their prices by P0.55 per liter for gasoline and P1.15 per liter for diesel.
The DOE said as of April 14, year-to-date adjustments stood at net decrease of P14.52 per liter for gasoline, P13.94 per liter for diesel and P19.15 per liter for kerosene.
Reuters reported that as of Friday last week, Brent futures settled at $28.08 a barrel while West Texas Intermediate (WTI) crude contract ended at $25.03 a barrel.
The report also cited that US crude futures hit a more than 18 year-low as oil prices remained weak even after the Organization of the Petroleum Exporting Countries (OPEC) and other producers announced a deal to cut output by nearly 10 million barrels per day (bpd) in response to weak demand.
Prices found some support as the US plans to ease lockdown measures after American president Trump laid out new guidelines for states to emerge from a coronavirus shutdown in a three-stage approach but still failed to cause a larger recovery.
Analysts expressed that at present, global fuel demand is down by roughly 30 percent but cited that if more countries would reopen paired with OPEC and its allies’ supply cut, prices could become more stable next month.
Global oil
Crude oil futures fell on Monday, with US futures touching levels not seen since 1999, extending weakness on the back of sliding demand and concerns that US storage facilities will soon fill to the brim amid the coronavirus pandemic.
The oil market has been under pressure due to a spate of reports on weak fuel consumption and grim forecasts from the OPEC and the International Energy Agency.
The volume of oil held in US storage, especially at Cushing, Oklahoma, the delivery point for the US West Texas Intermediate (WTI) contract, is rising as refiners throttle back activity due to slumping demand.
The front-month May WTI contract was down $2.62, or 14 percent, to $15.65 a barrel. At one point, the contract had fallen as much as 21 percent to hit a low of $14.47 a barrel, the lowest since March 1999.
That contract is expiring on Tuesday, and the June contract, which is becoming more actively traded, fell $1.28, or 5.1 percent, to $23.75 a barrel. Brent was also weaker, down 21 cents, or 0.8 percent, to $27.87 a barrel.
The plunge in crude oil prices reflects a glut at the main US storage facilities at Cushing and a big drop in demand, said Michael McCarthy, chief market strategist at CMC Markets in Sydney.
“It hasn’t reach capacity but the fear is that it will,” he said, adding that once the maximum capacity is reached, producers will have to cut output.
Production cuts from OPEC and its allies such as Russia will also kick from May. The group has agreed to reduce output by 9.7 million bpd to stem a growing supply glut after stay-at-home orders and business furloughs to curb the COVID-19 pandemic that has killed more than 164,000 people worldwide sap fuel demand.
The oil industry has been swiftly reducing production in the face of an estimated 30 percent decline in fuel demand worldwide. Saudi Arabian officials have forecast that total global supply cuts from oil producers could amount to nearly 20 million bpd, but that includes voluntary cuts from nations like the United States and Canada, which cannot simply turn on or off production in the same way as most OPEC nations.
Numerous majors have announced supply reductions, including Chevron Corp, BP plc and Total SA. But economic growth is sagging, and physical crude markets and an estimated record 160 million barrels of oil stored onboard ships suggest prices will keep falling.
“There’s still some concern that the 10 million barrels per day cut won’t be enough to offset demand destruction so the outlook for oil prices remain subdued,” McCarthy said.
North American exploration and production companies have cut their budgets by roughly 36 percent on a year-over-year basis, according to a Sunday note from James West, analyst at Evercore ISI, while international companies have cut budgets by 23 percent. –(with Reuters)
