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Oil prices up for 7th week in a row

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The country’s oil firms raised pump prices for the seventh consecutive week by as much as P1.50 per liter effective 12:01am Tuesday to reflect the movement of prices in the world oil market.

Chevron Philippines, Inc., PTT Philippines, Seaoil Philippines, PetroGazz, Unioil Petroleum Philippines and Cleanfuel announced the latest oil price hike of P1.50 per liter for diesel, P1.45 per liter for kerosene and P1.30 per liter for gasoline.

“Effective 12:01AM Oct. 12, 2021, Caltex (CPI) will increase fuel prices of Platinum by P1.30 per liter, Silver by P1.30 per liter, diesel by P1.50 per liter and kerosene by P1.45 per liter,” CPI said in its advisory.

Other oil companies are expected to follow suit.

Over the weekend, Unioil said it expected diesel to go up by P1.40 to P1.50 per liter and gasoline by P1.20 to P1.30 per liter.

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On October 5, the oil companies implemented a price increase in domestic oil products, i.e. P1.45 to P1.50 per liter for gasoline, P2.00 to P2.10 per liter for diesel and P2.05 to P2.10 per liter for kerosene.

These resulted in the year-to-date adjustments to stand at a total net increase of P16.55 per liter for gasoline, P15 per liter for diesel and P12.74 per liter for kerosene, according to the Department of Energy.

Gasoline currently sells from P48.54 to P73. 96 per liter and diesel from P42.15 to P59.37 per liter in the National Capital Region based on latest DOE data. Price depends on brand, location and competitive forces.

Energy Secretary Alfonso Cusi last week called on oil companies to ensure their compliance with the minimum inventory requirements (MIR) amid the global oil supply outlook and forecasted higher world oil prices for the fourth quarter of the year.

“I am directing all oil companies in the country to ensure adequate supply and come up with plans to mitigate possible price hikes of oil products in the coming months,” Cusi said in a statement.

“The DOE will continue to closely monitor global oil supply and price movements. As always, we are working with the downstream oil industry players to ensure that all mechanisms are in place to protect our consumers against the impact of such developments as much as possible,” the energy chief said.

Under Executive Order 134 (Requiring Oil Companies and Bulk Suppliers to Maintain a Sufficient Minimum Inventory of Petroleum, for Purposes of Ensuring Continuity, Adequacy and Stability of Crude and Fuel Supply), “all oil companies and bulk suppliers operating in the country, shall maintain a minimum inventory of petroleum stock.

The amount should be “sufficient to ensure a continuous, adequate and stable supply of petroleum products should domestic and international events, such as, but not limited to terrorist attacks, armed conflicts in the Middle East and in other regions whence the Philippines draws or secures its petroleum supply, threaten or restrict the supply of petroleum to the Philippines.”

On the other hand, DOE circular 2003-01-001 prescribes the implementing guidelines for the MIR of petroleum oil companies andbulk suppliers.

The circular requires that all oil companies, except refiners operating in the country, and bulk suppliers maintain a minimum inventory equivalent to 15 days’ worth of petroleum products’ supply, except for liquefied petroleum gas (LPG).

It also requires seven days’ worth of supply must be maintained for LPG; and refiners are required to maintain MIR equivalent to 30 days’ worth of supply, consisting of petroleum crude oil and refined petroleum products.

The DOE-Oil Industry Management Bureau (DOE-OIMB) warned that international oil market developments may trigger further oil price increases.

Based on DOE’s monitoring, aggressive demand in the fourth quarter is seen to reach as much as 103 million barrels of crude oil per day (mbpd), when supply is currently only at about 103.22 mbpd.

It said the absence of any additional supply from the Organization of the Petroleum Exporting Countries (OPEC) will likely push prices upwards.

From August to December, OPEC will only be enforcing a 400,000 barrel-increase per month, which is, however, expected to even out the supply-demand balance by the end of 2021.

At the same time, a potential deal with Iran, an additional supply option, has not progressed under the Biden administration. DOE said continued sanctions against Iran removes as much as two to three million barrels of crude oil per day from the world market.

Meanwhile, continued sanctions against Venezuela take away a potential supply of about one to two million barrels of crude oil supply per day from the global market.

Higher demand from increased economic activity in the fourth quarter of 2021, as first world countries continue to post high vaccination rates, coupled with the stocking of inventories for the heating season beginning October 1 to March next year continue to impact prices.

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