Prices of local petroleum products are seen to drop if prices of crude oil imports leveled at $21 to $22 per barrel (/bbl.), a top executive of a leading oil refiner said yesterday.
Jose A. Syjuco Jr., Petron Corp. chairman and chief executive officer made the forecast yesterday following the decision of the Organization of Petroleum Exporting Countries (OPEC) to add some 1.7 million barrels per day to its production level.
OPEC reduced its oil output since early last year forcing prices of Dubai crude from $10 per barrel to as much as $28.40 in early March this year.
"It is possible to consider a rollback of local pump prices as long as prices of crude remain in the vicinity of $21 to $22 per barrel," Syjuco said during a forum sponsored by the Greenhills Walking Group held at La Dolce Fontana Restaurant.
Syjuco, however, said that they must also take into consideration the retail price of petroleum products sold by the new players.
"We are also limited by the competition poised by the new players. Naturally, we can not price ourselves out of the market," he said, adding that the foreign exchange rates remains a major factor.
However, some OPEC members are also guilty of "leakage" or unofficial production, which is also sold in the market. It is believed that the "leakage" comes close to the official extra supply of 1.7 million bpd which has left the market guessing if there will really be a net increase in volume or whether the net addition would only be an addition to the "leakage."
Energy officials said that if the leakage will be a net addition to the official net extra of 1.7 million bpd, then there is a real possibility that prices of crude would drop.
Last year, OPEC reduced its oil output by 4.32 million barrels daily in a bid to force prices upwards.
OPEC is hoping to create a condition where the US market will be trading crude at $25 to $27/bbl. This means that Brent prices (European market) will be trading at $23 to $25 since it is traditionally $1 to $2 lower than the US market.
Likewise, Dubai crude should then soften between $21 and $23 following the same traditional price differential.