IES projects further reduction in fuel price after 2% decrease in last pricing window
The Institute for Energy Security (IES) is projecting a 3-5% further downward adjustment in the price of fuel per litre at the various pumps in the second pricing window for the month of December.
The projection by IES follows a 2% decrease in fuel price by GOIL in the last pricing window of the month of November.
Local Fuel Market Performance
For the local fuel market, prices decreased marginally within the window under review. GOIL, the largest market shareholder amongst the Oil Marketing Companies (OMCs) reduced their margins on the Price Build-Up (PBU) eventually resulting in reduced prices at their pumps as part of measures to cushion customers from the rising fuel prices and following demands by the Ghana Private Road Transport Unions (GPRTU) for reduced fuel prices.
Other OMCs also reduced their prices. The current national average price of fuel per litre at the pump is pegged at Gh¢6.58 for both Gasoline and Gasoil representing a decrease of 2% from the previous window’s national average price of Gh¢6.71 per litre.
For the Pricing-window under review, Benab Oil, Cash Oil, Goodness Oil, Top Oil, Zen Petroleum, Star Oil and Frimps Oil sold the least-priced fuel on the local market. Shell (Vivo), Total, Engen, GOIL, Allied, Petrosol, and Puma had the highest-priced fuel on the market according to the IES Market-Scan.
World Oil Market
For the window under assessment, the price of the international benchmark, Brent crude averaged about $81.01 per barrel mark representing an increase of 0.98% from the previous window’s average price of $80.25 per barrel mark.
Source: IES Construct 2021, with data from Oilprice.com
Concerns about pandemics weighed on oil prices during the recently closed trading window, following reports that the omicron variant was set to have a negative impact on oil consumption. These findings are in spite of reports that the variety in question causes far fewer symptoms among those infected than previous varieties.
There is still some concern on the market about the possibility of more Covid-19 measures that might cut oil consumption going forward.
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On a global scale, oil prices began to rise shortly after the opening of this window, but gains were limited by investor concerns about oil demand following the reimposition of new restrictions in Europe and Asia in response to an increase in coronavirus cases, which were primarily caused by the Omicron variant of the virus.
Brent prices have received a confidence boost as a result of the decision by the Organization of the Petroleum Exporting Countries (OPEC) to increase output by another 400,000 barrels per day in January. The market has reacted positively to the decision, indicating that it is a favorable development.
Prices of finished products as monitored on Standard and Poor’s worldwide Platts platform, indicate that the price of the international commodities gasoline (Petrol) and gasoil (Diesel) have fallen over the period.
The Gasoline price declined by 11.68% to $685.68 per metric tonne at the closing of the window, down from $776.36 per metric tonne earlier in the previous window. Gasoil price also fell by 8.64% to close trading at $628.28 per metric tonne, down from $687.70 per metric tonne in the previous window.
Local Forex
Data collated by IES Economic Desk from the Foreign Exchange (Forex) market shows the Cedi depreciated marginally against the U.S. Dollar. The exchange rate stands at Gh¢6.21 against the US Dollar representing a 1% depreciation from the previous rate of Gh¢6.15.
PROJECTIONS FOR DECEMBER 2021 SECOND PRICING-WINDOW
With the 0.98% increase in the price of the International Benchmark- Brent crude together with the 11.68% decrease in Gasoline price, the 8.64% decrease in Gasoil price; the Institute for Energy Security (IES) projects for a 3-5% downward adjustment in the price of fuel per litre at the various pumps despite the marginal depreciation of the cedi of 1%.