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MANILA, Philippines—Oil firms may raise pump prices for the third straight week on expectations of slower output growth over the next few months due to declining drilling rig counts in the United States and stalled labor talks between US oil firms and union workers.
Industry sources said oil prices may climb by up to P1 per liter this week, making it the third straight week of upward adjustment since the international market started focusing on shale rig monitoring in the United States.
The total year-to-date adjustments amounted to a net decrease of 5 centavos per liter for gasoline and 75 centavos per liter for diesel.
On Feb. 17, oil players implemented a P1.15 per liter increase for gasoline and kerosene, and P1.50 per liter for diesel.
The Department of Energy said benchmark gasoline prices so far ranged from P36.95 to P43.10 per liter and diesel prices ranged from P27.10 to P30.45 per liter.
The United States, a big consumer of fuel, is seen as a great stabilizer in world fuel prices with its rising production. Falling rig counts since earlier this year, however, have raised the possibility of output cuts and tighter oil supply, interrupting oil price declines since late 2014.
Uncertainty over labor protests at a few refineries and chemical plants called by the United Steelworkers Union (USW) also lent support to recent price hikes. USW members went on strike after their three-year contract expired on Feb. 1 and industry negotiators failed to address “serious concerns,” said the Department of Energy’s Oil Monitor report.
Other factors cited by industry sources included the recent Asian gas/oil market gains from the Vietnamese spot demand ahead of the Tet holidays or Lunar New Year, and a stronger market in Europe.
However, influential oil market watcher Platts has said that supply remained plentiful with regional refiners running their plants at high rates. So there may be downward pressure on the gas/oil market in the coming weeks. Riza T. Olchondra