MANILA, Philippines--Local oil firms are still expected to cut fuel prices this month, according to the Department of Energy.

Energy Secretary Angelo Reyes said on Monday that since the average price of the regional benchmark Dubai crude was just around $40 a barrel in December, as compared with around $50 a barrel in November, oil companies still had some leeway to reduce pump prices.

"We think we could expect some more (reductions) because the price of Dubai crude reached an average of $40 a barrel, and that is what we are looking at for the pricing in January. We're talking about the whole month of January. We should see some more movement downwards, reasonable ones," he said. "Because of the low monthly average for December, which is our reckoning point, we could reasonably anticipate more reductions in oil prices."

After January, however, he said it would be difficult to predict any further price cuts.

"I don't think we can expect people to project beyond one month because we are using the previous month's average. (There's also) the volatility of the situation in the Middle East. Add to that what's happening in Nigeria where the pipeline was attacked, and what's happening in Russia and Ukraine," he related.

"It's difficult to say that no event in the Middle East will influence prices. If you have a major outbreak of hostilities there that goes out of control, it's anybody's guess," he added.

Global demand also partly dictated where international oil prices could go.

The International Energy Agency expected demand in 2009 to rise by 440,000 barrels a day to 86.28 million barrels a day. Demand contracted in 2008 to 85.84 million barrels a day, according to the IEA, due to the slowdown in the global economy.

For 2009 as a whole, Reyes quoted industry analysts as saying that crude prices should hover within the vicinity of $40-$60 a barrel.

In 2008, gasoline prices went down 19 times for a total of P28.50-P34.50 a liter, while diesel prices dropped 17 times for a total of P25.50-P28.50 a liter.