Pump prices go up again on weekend

By Euan Paulo C. Añonuevo, Reporter

Fuel prices are expected to rise again today, as oil firms said they have to recover losses incurred from the soaring prices of crude in the world market.

Oil prices in Asian trade went up on Friday after sliding earlier.

Oil firms in the Philippines are expected to hike prices by another P1.50 per liter after incurring P7.50 in under-recoveries. Earlier, they recovered P3 of the amount, which means that price hikes would continue until July.

Starting June 14, the prevailing domestic price of fuel has been averaging at P55.26 to P57.07 for unleaded gasoline; P52.10 to P55.30 for kerosene; and P48 to P49.97 for diesel.

The price of an 11-kilogram liquefied petroleum gas (LPG) cylinder has been hovering between P615 and P661.

The Department of Energy reported that as of June 20, the monthly average price of the regional benchmark Dubai crude increased by more than $6.50 per barrel compared to the May average.

Also, gasoline and diesel rose by about $8.40 per barrel and $6.50 per barrel to $139.58 per barrel and $168.07 per barrel, respectively, over the previous month levels.

The contract price for LPG rose by $57 per metric ton to $912.50 per metric ton this month.

Dubai crude, gasoline and diesel posted new record highs last week brought about by the sharp depreciation of the dollar against the euro, tensions between Israel and Iran, and the forecast of Morgan Stanley that falling US stockpiles could send crude to $150 a barrel by July 4.

$132 at Asian trade

In Friday’s trading in Singapore, the benchmark oil futures contract, New York’s light sweet crude for July delivery, rose 23 cents higher at $132.16 per barrel.

It had tumbled $4.75 earlier to close at $131.93 in US trade on Thursday following China’s announcement to hike oil prices.

Brent North Sea crude for August delivery rose 45 cents to $132.45 following a drop of $4.44 to settle at $132 in London on Thursday. Both the Brent and New York contracts had fallen in early Asian trade.

China became the latest Asian nation to curb energy subsidies by hiking retail petrol and diesel prices by as much as 18 percent, moving to close the gap between state-set domestic prices and the soaring world oil market.

Analysts said the move by the world’s second biggest oil consumer was important, but differed on its longer-term impact on soaring oil prices, which hit nearly $140 this month from a low under $11 in the 1990s.

“I think it’s very significant,” said Dave Ernsberger, Asia director of global energy information provider Platts. “It is going to eat into demand. I’m pretty sure of that.”

He had called China’s subsidies “the big gorilla in the room” ahead of its price hike announcement Thursday. Experts have said China’s booming economy has up to now been a key driver of the world’s growing appetite for oil.

But the fuel price hike “may temper growth in fuel demand in China, helping moderate demand-based pressure on oil prices,” David Moore, a commodity strategist at the Commonwealth Bank of Australia in Sydney, said in a report.

Fuel subsidy cuts elsewhere in Asia are already said to be hurting regional energy demand. Malaysia has hiked fuel prices by 41 percent and Indonesia by around 29 percent, while Taiwan and India have also raised energy costs.

Looking ahead

The longer-term impact of China’s move on world oil prices would not be clear until later in the year, when numbers about demand are released for the market to digest, Ernsberger said.

“It’s possible we won’t see a big impact on the price until September, October,” he said.

Victor Shum, an analyst at Purvin and Gertz energy consultancy in Singapore, said the impact from decreased demand for oil in China was likely to be small, as higher prices would stimulate production.

“The negative impact in demand growth in China may be more than compensated by increased supply,” Shum said.

Global finance officials fear soaring crude costs pose a threat to world economic growth, as higher inflation leads central banks to raise interest rates.

Thursday’s oil price fall of nearly $5 also came as Saudi Arabia, the biggest producer in the Organization of the Petroleum-Exporting Countries (OPEC), said it planned to increase output by 200,000 barrels per day.

Shum said the Saudi announcement would not have a major impact because the increase is “not that significant compared to the total oil demand of 86 million barrels a day.”

Concerns about lost Nigerian oil output might outweigh the Saudi increase due to the better grade of the African nation’s crude, Shum said.

Anglo-Dutch oil giant Shell said it had shut down a Nigerian offshore oilfield after an attack by militants. The field has a capacity of 200,000 barrels per day.

Hugo Chavez, president of OPEC member Venezuela, said prices should be around $100 per barrel, but “could soon reach $200” given political tension, threats against oil producer Iran and a weak US dollar.

Chavez threatened Thursday to shut off oil exports to European countries if they enforce tough new rules on illegal immigrants.

World leaders are also preparing for a high-level meeting between producers and consumer nations on Sunday in Jeddah to discuss soaring prices.
— With AFP(ManilaTimes)

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