Fuel prices to drop in second pricing-window this month
The Institute for Energy Security (IES) is projecting a marginal decline in the prices of petroleum products on the local market in the second pricing-window of July 2016.
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The second pricing-window, which starts from July 16 to the end of the month, is expected to see a 2.5 per cent decline in the prices of petrol and a 1.8 per cent drop in diesel prices on the local market.
Subsequently, the price decline is expected to increase consumption of both petrol and diesel by 2.9 per cent for the remaining days in July.
The Principal Research Analyst in charge of the Petroleum Unit of the IES, Mr Gilbert Richmond Rockson, told the GRAPHIC BUSINESS that those projections were being made on the back of a comfortable national fuel stock, the falling fuel prices on the world market and the relative stability in the local currency.
“The Institute for Energy Security can project a further drop in prices of fuel on the local market between 2.5 per cent on petrol and 1.8 per cent on diesel in the second pricing-window for the month of July 2016,” he said.
He added that “at the close of the new pricing-window, the IES expects consumption of petrol and diesel combined to increase by 2.9 per cent over the May 2016 figure of 306 million litres for the month of July 2016.”
Considering the prices of petrol and diesel, the anticipated drop would not have a great impact in monetary terms, but Mr Rockson explained that the significance of the drop would be felt over a cumulative period.
“In monetary terms, when you look at 2.5 per cent it might not be so significant, but it is significant enough. When the deregulation started in June 2015, the price was around GH¢3.47, it dropped in bits for a while and by December it was GH¢2.4. Just imagine the prices dropping by GH¢0.10 or even GH¢0.50 pesewas, and it continues in every window until December, then you will see its significance,” he said.
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Push factors
According to him, the cedi recorded some level of stability against the US dollar in the first pricing-window of July 2016, and is subsequently expected to remain stable over the next window.
Again, the surging fuel stock in the country, he says, has also pushed floating storage (offshore vessels) to a seven-month high. As a result, the combined stock of petrol and diesel (in-tank and offshore) as at July 14, 2016 is over 540 million litres, which is capable of meeting a little over seven weeks of demand for national consumption.
First pricing window results
The IES, after 14 days of trading in the first pricing-window for July 2016, sampled 25 Oil Marketing Companies (OMCs) across the country and found that the market recorded an average reduction of one per cent and 0.58 per cent on petrol and diesel, respectively.
A total of 11 OMCs: Shell, Total, Puma Energy, Allied Oil, Agapet Oil, Engen Petroleum, Star Oil, Lucky Oil, Petrosol and Rich Oil, made reductions to the price of diesel and petrol.
Engen Petroleum, Puma Energy, Unity Oil, GOIL, and Top Oil are the five top OMCs in terms of prices.
World Market Index
Platts, the benchmark for petrol and diesel prices went down by US$40.52 per metric tonnes and US$19.95 per metric tonnes, respectively, representing 7.9 per cent and 4.6 per cent over the first pricing window.
The average Platts prices for the first pricing-window were US$513.95 and US$436.20 per metric tonnes for petrol and diesel, respectively.
For the pricing-window starting July 16, 2016, Platts is reporting US$473.43 per metric tonnes and US$416 per metric tonnes for petrol and diesel, respectively.
Over the first window, North Sea Brent crude averaged US$47 per barrel; a US$2 decrease from the second-half of June 2016, and the third consecutive fall since reaching a high of US$52.51 per barrel in June 2016. Prices are forecast to average US$44 per barrel in 2016 and US$52 per barrel in 2017.