Oil mixed; interim stockpiling pushed

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    Local oil players are implementing another round of mixed price movements effective today, September 1, to reflect global crude prices which slumped again as American producers and refiners avoided the effects of Hurricane Laura last week.

    According to the Department of Energy (DOE), the latest average Manila price per liter of gasoline (RON95) is at P48.95, diesel at P37.57 and kerosene at P37.45.

    Pilipinas Shell and Seaoil adjusted the per liter prices of gasoline up by P0.10 but slashed the costs of both diesel and kerosene by P0.10.

    As of August 25, year-to-date adjustments on fuel prices summed up to a net decrease of P4.02 per liter for gasoline, P8.89 per liter for diesel and P13.29 per liter for kerosene.
    Reuters reported that as of Friday last week, Brent crude futures fell 4 cents to settle at $45.05 a barrel while US West Texas Intermediate lost 7 cents to end at $42.97 a barrel.

    The report said because of the weather disturbance, nine refineries had shut around 2.9 million barrels per day (bpd) of capacity or 15 percent of US processing capacity. It is on top of the 84.3 percent or 1.55 million bpd curtailed offshore crude oil production in the Gulf of Mexico due to the low global demand.

    Meanwhile, a note from PVM Oil Associates said demand expectations remain bearish since aside from Saudi Arabia, every oil producing nation believes global oil demand will not return to 2019 levels until at least 2022.

    The Philippine National Oil Co. (PNOC) earlier said the proposed strategic petroleum reserves (SPR) program— which aims to put up large stockpiles of crude oil or petroleum products in facilities located around the country and possibly overseas — will be pushed back to 2021 as target activities have been delayed due to the pandemic.

    PNOC said it will assist it in drafting a department circular that will address the establishment of an interim oil stockpiling mechanism to serve as a preliminary initiative relative to the wider more comprehensive and capital intensive national SPR program.

    “This mechanism will provide the government with an effective means of government intervention in response, should it be required, to the disruption in oil supply and price stability in times of price spikes while also taking advantage of the low global oil prices due to combined demand decrease and oil glut caused by the COVID‐19 pandemic,” it said.

    The firm said the interim oil stockpiling plan will be presented to the Department of Budget and Management to justify the special provision for the intended budget for said program, through the DOE’s endorsement.