Oil prices down; IEA warns against complacency

MANILA, Philippines — While oil firms announced reductions in oil prices locally for this week, the International Energy Agency (IEA) said countries should continue monitoring fuel supply chains and working towards fuel security.

Oil firms rolled back prices. Shell announced a fuel price rollback of 40 centavos per liter for gasoline, 45 centavos per liter of kerosene, and 30 centavos per liter of diesel, to take effect at 6 a.m. of Nov. 17.

Major oil firms such as Petron, Shell, and even smaller players earlier said the relative stability of oil prices have helped them recover somewhat from the sharp declines of 2014.

Petron, the country’s top oil firm, has said it will roll back prices by 40 centavos per liter of gasoline, 30 centavos per liter of diesel, and 45 centavos per liter of kerosene at 12:01 a.m. on Tuesday (Nov. 17).

Shell and Seaoil have also said in separate advisories that they will trim prices by 40 centavos per liter of gasoline, 30 centavos per liter of diesel, and 45 centavos per liter of kerosene at 6 a.m. on Tuesday, Nov. 17.

Minor oil players PTT Philippines and Phoenix Petroleum Philippines said they would roll back prices of its gasoline products by 40 centavos per liter and diesel by 30 centavos per liter at 6 a.m. Nov.17.

Ahead of the pack, Eastern Petroleum Corp., another minor oil player, said it slashed the price of diesel and gasoline by 30 centavos and 40 centavos per liter, respectively, at 6 p.m., on Monday, Nov. 16.

Eastern Petroleum chairperson and CEO Fernando L. Martinez said the latest price adjustment reflected the downward trend in world oil prices at the close of last week’s trading.

“Analysts expect the oil market to remain bearish, which could really hurt demand and world oil prices. With oil trading near its six-year lows, the healthy demand has prevented prices from dropping furtheramid the worsening oil glut due to oversupply,” Martinez said.

Compared to the second half of 2014, when oil prices dropped sharply to around $40 per barrel from the peak $110 per barrel early in the year, oil price trends for 2015 have not had severe declines orincreases so far.

The IEA said that while an extended period of declining oil prices would benefit consumers, it would have a downside in terms of energy security, considering it would heighten reliance on a small number of low-cost producers.

There is also the risk of a sharp rebound in price if investment falls short, according to the IEA’s 2015 edition of its flagship “World Energy Outlook” publication (WEO-2015).

According to the report, plunging oil prices have spurred higher demand and lowered growth in supply, leading the market to rebalance. Even noting that the adjustment mechanism in oil markets “is rarely a smooth one,” IEA said, a central scenario of WEO-2015 projected that the increased reliance on Middle East oil exports could eventually escalate to a level last seen in the 1970s.

However, a tightening oil balance would later make the oil price rebound to a price around $80 per barrel by 2020.  “It would be a grave mistake to index our attention to energy security to changes in the oil price,” IEA Executive Director Fatih Birol said in a statement posted on the IEA web site. “Now is not the time to relax. Quite the opposite: a period of low oil prices is the moment to reinforce our capacity to deal with future energy security threats.”  SFM