Oil prices are being cut anew due to supply glut

Oil firms are rolling back prices for the 10th straight week, at least for gasoline, amid a lingering supply glut and slower demand from gas-guzzling economies such as China.

Petron, Shell, and Seaoil said in separate advisories that they would implement price cuts for gasoline (P1.10 per liter), diesel (40 centavos per liter), and kerosene (25 centavos per liter) from 12:01 a.m. Tuesday, August 25.

Phoenix Petroleum and PTT Philippines will adjust gasoline and diesel prices by the same amount from 6 a.m. Tuesday.

Ahead of the pack, Eastern Petroleum Corp. reduced gasoline and diesel prices by P1.15 per liter and P0.45 per liter, respectively, effective 6 p.m., Monday, August 24.

Including this week’s rollback, Manila has had 21 oil price cuts (for gasoline, given last week’s mixed price movement), and 14 hikes of varying degrees since the start of 2015.

Department of Energy OIC Zenaida Y. Monsada told reporters that world oil prices continued to fall amid continuing oversupply in petroleum products and the sluggish demand in Asia, particularly in China.

Eastern Petroleum chairman Fernando L. Martinez said the price cut for gasoline, the 10th straight one since mid-June, and diesel reflected the continuous downward trend in world oil prices. “The latest reduction, particularly for gasoline prices, reflects the continuous downward trend in global gasoline prices, while the diesel price hike is attributable to the slight increase in international diesel prices and the depreciation of the peso against the dollar,” Martinez said.

Shell country chairperson Edgardo O. Chua earlier said that oil prices would have been even lower if the peso had been stronger. On Monday, for example, the peso weakened to P46.815:$1 from P46.05 at last week’s close. It is the weakest since P46.835 on June 7, 2010.

Last week, oil firms implemented mixed price movements. They trimmed gasoline prices by 25 centavos per liter and raised prices for diesel by 35 centavos per liter and kerosene by 20 centavos per liter, respectively. Including this week’s rollback, Manila has had 20 oil price cuts and 14 hikes of varying degrees since the start of 2015. The net increase for gasoline since January 2015 has been reduced further to 39 centavos per liter. Diesel prices have so far had a net decrease of P4.59 per liter.

Analysts believe that oil prices are not seen to recover soon as output continues to increase, while global oil demand remains low. World oil prices might rebound towards the end of the year at an average of $60 to $69 per barrel, analysts said. Oil prices have been going down for the most part of 2015 since prices started dropping sharply in the latter half of 2014. However, this year, price movements have been more or less stable at an average pace of 5 percent, something which oil firms welcomed.