GLOBAL oil prices are getting low but demand is falling.
While domestic fuel prices have also started to drop, there isn’t much thirst for the commodity as the coronavirus pandemic keeps people at home, cutting demand for transport.
Based on the latest available data from the Department of Energy (DOE), year-to-date fuel price adjustments stand at a net decrease of P14.72 per liter for gasoline, P13.39 for diesel and P18.20 for kerosene.
In fact, major oil companies are set to roll back prices of petroleum products anew starting Tuesday, April 7, 2020, marking the fifth consecutive week of price cuts.
In Cebu City, diesel prices ranged from P30.54 to P37.53 per liter, based on DOE’s latest price monitoring in March. Kerosene prices were also sold from P32.55 to P34.21 per liter.
Retail prices of liquefied petroleum gas (LPG) products in Cebu City have also dropped.
The price of an 11-kilogram LPG tank which ranged from P816 to P894 previously has gone down to a price range from P773 to P820, depending on the brand, the DOE data further showed.
So what triggered the fall in world oil prices?
It’s a mix of reasons but ultimately, the month-long price war between Saudi Arabia and Russia has left the market awash in crude, plus the Covid-19 pandemic that has cut demand for oil.
Prices have plummeted as the market waits for the planned cut in oil production by the Organization of the Petroleum Exporting Countries (Opec).
Opec and its allies are working on a global agreement for an unprecedented oil production cut equivalent to around 10 percent of worldwide supply in what they expect to be a global effort including countries that do not exert state control over output, such as the United States.
But whether that can stabilize prices that have fallen by more than half this year due to the viral pandemic is questionable.
According to the International Energy Agency, the deepest cuts in the industry’s history wouldn’t be enough to calm the market.
Nicholas Antonio Mapa, senior economist at ING Bank, said the “depressed demand” in the global economy caused the drop in oil prices.
“Oil prices were also hit on expectations for depressed demand from China and in turn, the entire global economy, as the engine of economic growth grinds to a halt,” he said.
Brent crude traded lower by US$2.39 a barrel or seven percent on Monday, April 6, after earlier touching a session low of $30.03 a barrel. US crude traded down $2.41 a barrel or 8.5 percent at $25.93 a barrel.