The Institute for Energy Security, an energy think-tank in the Republic of Ghana, West Africa, is predicting a three percent reduction in the price of fuel for the second window in February.
“From the 12.16 percent significant decline in prices of Brent crude, coupled with the 10.58 percent and 8.66 percent considerable reduction in the prices of Gasoil and Gasoline respectively on the international market; the Institute for Energy Security (IES) foresees prices of fuel on the local market dropping by roughly three percent.
“The significant fall in the value of the US Dollar makes the case for fuel price reductions at the pump stronger,” the IES said in a statement signed by Raymond Nuworkpor, Head of Research & Policy.
Below is IES’ full statement
FALL IN INTERNATIONAL PRICES OF OIL MUST REFLECT AT THE PUMP
REVIEW OF FEBRUARY 2020 FIRST PRICING-WINDOW
Local Fuel Market Performance
Fuel prices experienced reduction at some Oil Marketing Companies (OMCs) pumps including Shell Ghana in the Pricing-window under review as predicted by the Institute for Energy Security (IES). However, the First Pricing-window of February 2020 saw majority of OMCs maintaining their prices at the pump to record a national average price of Gh¢5.48 and Gh¢5.46 for Gasoil and Gasoline respectively.
Within the period under review, Zen Petroleum, Benab Oil, Nick Petroleum, Frimps, Champion and Cash Oil, are among few OMCs that sold the least-priced Gasoline and Gasoil on the local market relative to others in the industry as found by IES Market-scan.
World Oil Market
Market fears and weak oil demand have precipitated a continued oil price slide with Brent crude benchmark falling on Monday (10th February, 2020) to lows as $53.27 not seen since the end of 2018. IES analysis indicates that the major contributory factor for the free fall of the Brent crude prices is the impact of the Novel Coronavirus. Other factors include hot winter and planned maintenance. The hydrocarbon industry relies on cold weather across the northern hemisphere to drive demand for oil and gas to heat homes and workplaces in the world’s most advanced economies. Also, most oil industry giants announced way before the novel Coronavirus about their planned maintenance. Brent crude decreases considerably by 12.16% from $63.63 per barrel to close at $55.89 per barrel on average terms during the period under review.
S&P’s Platts benchmark for fuels shows average Gasoline price decreasing by 8.66% to close at $536.77 per metric tonne, from a previous average of $587.68 per metric tonne; while Gasoil declined by 10.58% to close trading at $503.38 per metric tonne.
Local Forex
Data collated by IES Economic Desk from the Foreign Exchange market shows the Cedi appreciated significantly (4.44%) against the U.S. Dollar, trading at an average price of Gh¢5.37 to the U.S. Dollar over the period under review; from a previous rate of Gh¢5.62 recorded in the second Pricing-window of January, 2020.
PROJECTIONS FOR FEBRUARY 2020 SECOND PRICING-WINDOW
From the 12.16% significant decline in prices of Brent crude, coupled with the 10.58% and 8.66% considerable reduction in the prices of Gasoil and Gasoline respectively on the international market; the Institute for Energy Security (IES) foresees prices of fuel on the local market dropping by roughly 3%. The significant fall in the value of the US Dollar makes the case for fuel price reductions at the pump stronger.
SIGNED:
Raymond Nuworkpor
Research & Policy, IES
(054387669)