Pump prices drop on storage lack

MANILA, Philippines–Local oil firms are rolling back pump prices as storage capacity runs out in the international market.

Oil majors Petron, Shell and Chevron, as well as Seaoil, announced downward price adjustments of P1.10 per liter for gasoline, 95 centavos per liter for diesel and 90 centavos per liter for kerosene effective 12:01 a.m. Tuesday.

Other firms are expected to follow suit since most of the fuel sold in the country is imported and thus vulnerable to the same price factors.

The second straight week of rollbacks indicates that market fundamentals for oil remains weak, industry observers said, despite temporary periods of price hikes.

Oil prices dropped dramatically in the second half of 2014 following mixed price signals in the first half.

In early 2015, oil market analysts predicted continuing overall weakness in demand but noted a rise in the demand for oil storage as many firms sought to take advantage of the low oil prices to turn a profit when prices climb.

Storage supported prices for several weeks in February and early March but it appears capacity is full, paving the way for sufficient supply to come flooding back into the market.

Last week, most oil companies rolled back gasoline prices by 50 to 55 centavos per liter, diesel by 85 centavos per liter and kerosene by P1.10 per liter.

With this week’s adjustments, gasoline prices have had a net increase of 27 centavos per liter, while diesel prices have had a net decrease of P1.60 per liter from January.–Riza T. Olchondra