The Institute for Energy Security (IES) has said that fuel prices at the pumps are likely to go up from two to four per cent, when the second pricing window kicks off from December 16.
“In line with the deregulation of the downstream sector of the oil industry, the Institute for Energy Security (IES) can project an increment of between two and four per cent on both gasoline and gasoil by the oil marketing companies over the next two weeks,” a press release signed and released by the Principal Research Analyst of the Petroleum Unit of IES, Richmond Rockson, on Thursday December 15 said.
IES explained that this is as a result of rising crude and refined oil prices on the international market, coupled with the low stock of fuel in the country, and the depreciation of the Ghana cedi against the U.S. dollar.
Below is the full press release:
FUEL PRICES TO GO UP BY 2 – 4 PERCENT REVIEW OF FIRST PRICING-WINDOW FOR DECEMBER 2016
Local Fuel Market
The first Pricing-window for December 2016 produced some interesting developments on the local fuel market. Trading activities on the market saw over 80% of Oil Marketing Companies (OMCs) trading a litre of fuel for Ghs3.599. Many analyst believe the local market is curling into a cartel regardless of the National Petroleum Authority’s regulation which seeks to prohibit cartelization under the price liberalization regime. In terms of market average, pump prices went down by 1.96% and 1.75% on Petrol and Diesel respectively over the Pricing-window, with an average pump price for Petrol and Diesel going for Ghs3.586/litre and Ghs3.587/litre.
World Petroleum Market Indices
OPEC’s agreement reached at the close of last month to cut oil output by 1.2 million barrels per day (removing 1% of global oil supply from the market) impacted on Brent crude prices, as it rose 12% over the first Pricing-window to close at $53.47/barrel on average terms. Both Brent and WTI crude prices were driven more by “feverish speculation” than actual changes to production. Rising crude oil prices and falling Gasoline production in China has pushed up the prices of Gasoline and Gasoil. Global Gasoline and Gasoil prices rose by $41.5/metric ton (8.25%) and 32.47 (7.72%) within the first two weeks of December 2016 to $504.23 per metric ton and $452.70 per metric ton respectively, as reported by Standard and Poor’s Platts.
Local Market Index and Inventory
The country’s combined stock of Gasoline and Gasoil fuel slumped to lowest levels since January 2016 to 281 million litres, a 9.06% drop from end November 2016. Diesel stock is at a critical level of 127 million litres which is capable of meeting just two weeks of national demand. The crude oil stock at the Tema Oil Refinery offer some hope after receiving an additional one million barrel from the Tweneboa-Enyenra-Ntomme (TEN) field a few days ago, and ramping up daily production from 26,000 barrels to 50,000 barrels after retro-fitting on the refinery plant. Today the country’s crude oil stock meant to be refined is at record high of 1.34 million barrels. The Ghana Cedi performed poorly against the U.S. Dollar over the past two weeks, falling by 2.9% to close at Ghs4.097 per Dollar.
PROJECTION FOR DECEMBER 2016 SECOND PRICING-WINDOW
Prices of Gasoline (Petrol) and Gasoil (Diesel) on the local market are set to rise when the second Pricing-window opens on 16th December 2016; as a result of rising crude and refined oil prices on the international market, coupled with the low stock of fuel in the country, and the depreciation of the Cedi against the U.S. Dollar.
In line with the deregulation of the downstream sector of the oil industry, the Institute for Energy Security (IES) can project an increment of between 2 and 4 percent on both Gasoline and Gasoil by the Oil Marketing Companies over the next two weeks.
Principal Research Analyst, Petroleum Unit – IES