After weeks of oil price increases, oil firms announced Monday that they will reduce fuel pump prices this week.
Gasoline prices will go down by P0.65 per liter, diesel by P0.70 per liter and kerosene by P0.75 per liter.
The new price adjustment takes effect at 6 a.m. of Tuesday, August 10 as announced separately by Seaoil, PTT, Pilipinas Shell, Phoenix, Petron, Total.
Other oil firms are expected to announce a similar price adjustment.
Last week, oil firms raised gasoline prices by P1.05 per liter, diesel by P0.75-P0.80 per liter and P0.75 per liter for kerosene.
These resulted to the year-to-date adjustments to stand at a total net increase of P13.90/liter for gasoline, P11.10/liter for diesel and P9.45/liter for kerosene.
Oil firms adjust their prices every week to reflect movements in the world oil market.
The Department of Energy (DOE) cited high demand, insufficient increase in supply and continuing US sanctions as among the reasons for high world oil prices.
It said the continued recovery in world demand has resulted to global supply-demand balance crude oil deficits of 370,000 and 140,000 barrels per day (b/d), respectively, in the first and second quarters of 2021.
Based on reports, the DOE said this market sentiment will continue to develop, with projected increasing demand versus ongoing supply restrictions from the Organization of the Petroleum Exporting Countries (OPEC) and United States’s sanctions against Iran and Venezuela, which are all seen to be the underpinning factors pointing to sustained price increases for the rest of the year.
Platts Analytics’ projections for the third quarter of the year shows an increasing demand. The increase in demand is expected to be around 5.98 million b/d of crude oil higher than the second quarter.
Also, the projected increase of around 5.98 million b/d for the third quarter will not be fully covered by the projected increase in supply.
The projection shows that the non-OPEC countries will increase their supply only by around 830,000 b/d, while OPEC countries have agreed only to increase their production by around 800,000 b/d for the third quarter. This imbalance for the third quarter is expected to result to a projected insufficiency of crude oil global supply by around 4.35 million b/d.
Further to the ongoing OPEC crude oil supply restriction, around 2 million b/d from Iran and 700,00 b/d from Venezuela remain restricted due to US sanctions. These additional supplies could have helped eased the insufficiency of supply.