Fuel prices up slightly on falling US drilling

Local oil firms raised prices slightly for major fuel products amid falling US drilling activity for a fourth straight week.

Most oil firms including Petron, Shell and Seaoil raised prices by 50 centavos per liter for gasoline, 10 centavos per liter for diesel and 10 centavos per liter for kerosene from 12:01 a.m. Tuesday.

Eastern Petroleum Corp. announced it was trimming gasoline and diesel prices by 50 centavos and 10 centavos, respectively, from 6 a.m. Tuesday. The minor oil firm attributed the price hike to an uptick in world oil prices at the end of last week’s trading.

“Analysts believe prices are adversely affected by the potential increase in global supply hinged on Iranian oil getting back on the market when sanctions are lifted. Markets have little or no clear direction of where prices are heading, as supplies continue to outpace demand,” Eastern Petroleum said.

Since January to date, adjustments for gasoline had a net increase of P1.61 per liter, while diesel prices had a net decrease of P3.04 per liter.

Household cooking gas LPG remained at a net decrease of P10.60 per kilogram.

The slight rise in prices this week does not necessarily signal a solid recovery in prices, experts said. Oil prices in fact dropped Monday, with analysts citing mediocre economic growth outlook among fuel-guzzling economies as the main reason for low crude prices.

There has been an ongoing reduction in US drilling over the past few weeks, yet analysts said US oil output was holding up.

US shale oil output would likely be the main driver this week for oil prices, analysts said. The United States Energy Information Administration is due to release its monthly petroleum supply report on Wednesday.

In regional trade, the Department of Energy’s (DOE) Oil Monitor said industry think tank Platts noted slightly upbeat supply and demand fundamentals for gasoline, contrary to the bearish US gasoline market ahead of the colder winter months.

“It said October is quite supported due to the many refinery turnarounds and hajj demand [from Indonesia],” the report said.—Riza T. Olchondra