Oil prices up as US economy turns bullish

MANILA — Oil firms raised prices this week as global stocks fell amid bullishness in the U.S. economy, which could spur demand for fuel.

The oil price hikes were also spurred by speculation that price slides might be bottoming out.

Major oil firms Petron and Shell announced price hikes for gasoline at P1.60 per liter, diesel at P1.25 per liter, and kerosene at P1.15 per liter effective 6 a.m., Tuesday, March 15.

Seaoil, a minor oil player, announced similar price hikes for gasoline, diesel, and kerosene also at 6 a.m. on Tuesday.

Phoenix Petroleum, PTT Philippines, and Eastern Petroleum will also impose the price hike on gasoline at P1.60 per liter and on diesel at P1.25 per liter at 6 a.m. on Tuesday.  They do not sell kerosene products.

Since January this year, there has been a net increase of 27 centavos per liter for gasoline and P1.20 per liter for diesel. LPG remained with a net decrease of P7.95 per kilogram.

Last week, oil prices increased on several days after the International Energy Agency reported production declines in the U.S., whose shale oil industry drove prices down starting around 2014.  Production also went down in other oil producers that were not members of the Organization of the Petroleum Exporting Countries or OPEC.

There were also reports that Iran’s output was not expected to greatly increase global market supply, or at least not as much as initially thought.

Trading in the early part of the week was encouraged by news of sustained lobbying by smaller OPEC members for a possible output freeze as well as stronger than expected refined product demand data from the EIA.

Since March 4, both front-month contracts for the U.S. crude benchmark (WTI) and the global crude benchmark (Brent) have settled above $35 per barrel, which analysts have said is a psychological level that could signal whether the price decline of the past year or so will continue or has reached the bottom.

Prior to that, crude prices had risen after China raised expectations for higher fuel demand from the country. The China Central Bank disclosed to guide the moderate growth of credit supply and create a good monetary environment for structural reform in the country, according to the Oil Monitor Report of the Philippines’ Department of Energy (DOE).

The DOE report said the rally was also fueled by pledges from the OPEC to work with other major oil producers to freeze production at January level. Some members of OPEC plan to meet other oil producers in Russia around March 20 for new talks on the freeze, forecasting the meeting would spark a dramatic reaction in crude prices. However, a Gulf OPEC delegate said no decision on the date or venue of a meeting has been made yet, although the Gulf countries prefer that it would be held in the first half of April, and preferably in Doha, or some other Gulf City.  SFM