Local Fuel Market Performance
Within the second pricing-window of September, prices of petroleum products saw marginal increment in the local market. The local Oil Marketing Companies (OMCs), increased their price of petroleum products between 1 to 2 per cent at the various pumps. The increase was in response to the increase in prices on the international market and the depreciation of the local currency against the US Dollar. The current national average price of fuel per litre at the pump is pegged at Gh¢6.18p for both Gasoline and Gasoil.
The IES Market-Scan picked Benab Oil, Top Oil, Zen Petroleum, Cash Oil and Goodness Oil as the OMCs with the least-priced fuel on the local market for the window under assessment.
World Oil Market
For this window, the international Benchmark, Brent Crude, saw an increase in price owing largely to the demand and supply imbalance experienced over the period. For the just ended window, crude traded at an average price of $75.50 per barrel, representing a 4.57 per cent rise over the September 2021 first-window price of $72.20 per barrel.
For the window under review, the increase in the price of the international Benchmark was as a result of the increased demand for oil and the supply disruptions. The continued rollout of the COVID-19 vaccines across all economies which has led to the easing of travel restrictions imposed by countries as a measure to curb the pandemic shored up demand for oil and its products.
The unexpected rise in demand has not been met with an adequate supply thereby pushing prices up resulting in a three straight weeks of gains.
On the supply side, the disruptions caused by the closure of refineries due to the spread of the Delta variant and the production disruptions in the US Gulf Coast by the Hurricanes Ida and Nicholas is still yet to be resolved. This has ultimately led to a tightening of oil supply to the market.
In Asia, particularly China, the rolling power outages in the North-Eastern part of the country due to their clean energy drive led to disruptions in factory activities, spelling doom in oil demand for the world’s largest importer of oil.
Price of oil has risen to above $80 per barrel for the first time in 3 years since the announcement of the US sanctions on Iran in 2018 that drove oil prices to four year highs.
With the onset of the cold winter weather in the Northern hemisphere and the busy pandemic travels, prices are expected to continue to increase as there will be an increase in oil demand for heating purposes.
The price of the refined products, Gasoline and Gasoil as monitored on Standard and Poor’s global Platts platform experienced upward adjustments within the window. The price of Gasoline increased by 2.07 per cent to close the window at $735.50 per metric tonne from its earlier price of $720.53 per metric tonne. Gasoil price however experienced a sharp increase within the period by 10.28 per cent to close trading at $666.75 per metric tonne from its earlier price of $604.55 per metric tonne in the previous window.
Data monitored by the IES Economic Desk from the Foreign Exchange (Forex) market shows that the Cedi depreciated marginally against the U.S. Dollar by 0.63 per cent to close the window at Gh¢6.05 to the US Dollar from the previous window’s price of Gh¢6.01 to the US Dollar.
PROJECTIONS FOR SEPTEMBER 2021 SECOND PRICING-WINDOW
For the first Pricing-Window of October, the 4.57 per cent increase in the price of the International Benchmark- Brent crude, the 2.07 per cent increase in price of Gasoline, the 10.28 per cent increase in Gasoil price, the 0.63 per cent depreciation of the local currency against the US Dollar; the Institute for Energy Security (IES) projects for price of gasoil to increase and price of gasoline to remain stable on the domestic market at the various pumps as we enter October.