Oil prices seen to stabilize for rest of the year

Oil prices are likely to stabilize over the remaining months of the year, industrialist and consumer advocate Raul Concepcion said.

Concepcion, chairman of the Consumer and Oil Price Watch (COPW), told reporters that if global oil prices continue on their downward trend, there will be no more price hikes expected this year.

“My prediction is that prices, once we address the issues on under-recovery, and average Dubai crude reaches $100 or $110 per barrel, there will be no more price increases,” he said.

Concepcion said if Dubai crude, the benchmark used by the oil refiners, drops below $100, then consumers may even enjoy more rollbacks for the rest of the year.

“There will be no price hikes if Dubai crude will be lower than these levels. This already took into consideration the peso depreciation. Between October and December, there will be no more escalating oil prices, and we may even expect more rollbacks,” he said.

He said barring some unforeseen events, “we will have a better fourth quarter.”

“We hope that the worst is over. Prices will remain stable until December,” the COPW chief said.

Concepcion also called on the government to come up with concrete long-term solutions to the problems of the oil industry.

“Oil prices affect the lives of our people. Once it goes up or down, everything moves also,” he said.

He said it is high time for the government to put up infrastructure such as trains and skyways to ease the traffic in the metropolis.

According to Concepcion, there is also a need to construct farm-to-market roads so that haulers of goods and commodities will not have difficulties transporting their produce.

“What makes commodity prices even higher is hauling charges which are affected by inadequate road access,” he said.

He added that government should also upgrade agricultural facilities to help farmers improve their harvest.

Earlier, the oil companies managed to bring down their pump prices by P2 per liter last week.

But despite the rollback, the transport groups are clamoring for more price reduction with the continued softening of oil prices.

Based on Department of Energy (DOE) monitoring, the September average-to-date price of Dubai crude decreased by about $8 per barrel compared to the August average. 

Prices of gasoline and diesel also decreased by about $5 per barrel and $9 per barrel, respectively, over the previous month’s levels. The contract price (CP) of LPG (at 30-percent propane and 70-percent butane) decreased as well by $53 per MT, from $881 per MT in August to $828 per metric ton this month

Analysts also stressed that the decline in prices was also because of the strength of the US dollar and the continuing decline in consumer demand. US demand was estimated to have fallen by about one million barrels per day as a result of high prices, sluggish economic growth and the tight credit market.

The economic slump, they said, is spreading to Europe and could also affect Asia, the main driver of growth in oil demand. 

They said the dollar was also stronger against the euro and the British pound, while losing some ground against the Japanese yen, taking away some of the incentive from investors who tend to buy commodities, like oil, to defend against dollar weakness and as a hedge against inflation. — Donnabelle Gatdula