The local fuel market in the first Pricing-window in June 2017 recorded very interesting turn of events.
Prices were projected by Institute for Energy Security (IES)to rise up to 4% based on global oil market fundamentals. Puma Energy was the first Oil Marketing Company (OMC) to adjust prices upward but quickly had to backtrack due to stiff competition; one of the benefits of the downstream deregulation policy introduced in June 2016. Whereas most OMCs maintained prices from the previous Pricing-window, few Oil Marketing Companies (OMCs) including Goil, Shell, AP Oil and Total adjusted prices downward at the tail end of window for the market to record an average price drop of 0.51%.
IES MarketScan reveals that Frimps Oil, AP Oil and Puma Energy are selling the cheapest Gasoline and Gasoil on the local fuel market. The average price per litre of Gasoline and Gasoil is Ghs3.87 and Ghs3.85 at the close on the first Pricing-window.
World Oil Market Prices Indices
Benchmark Brent crude prices continue to fall on the international market, from an opening of $53 per barrel and closing at an average of $48.87, a change of $7.79%. This is as a result of the robust production growth by U.S. shale production and a similar growth in production by Non-OPEC members in spite of the announced production cut.
The benchmark prices from Platts for Gasoline and Gasoil shows a drop in prices for both products on the international market. Gasoline prices per metric tonne dropped from $544 to $522.74, a percentage drop of 3.91%. Gasoil prices also dropped by 7.47%; from $458.27 to $424 per metric tonne as the U.S. Energy Information Administration (EIA) reported an increase in Gasoline inventory last week.
Local Forex and Fuel Stock
Figures gathered from the banking sector indicate the Ghana Cedi depreciated against the U.S Dollar again, the third consecutive time. The current average exchange rate is Ghs4.32 per dollar, from an opening of Ghs4.27, a depreciation of 1.16%. Combined stock for Gasoline and Gasoil at the close of the first Pricing-window for June 2017 stood at roughly 247 million litres, capable of meeting 4-weeks of national demand.
PROJECTIONS FOR JUNE 2017 SECOND PRICING-WINDOW
Taking into consideration the market indicators like the Brent crude price which has dropped by over 7%, the drop in global prices of Gasoline and Gasoil by about 4% and 7% respectively, the depreciation of the Ghana Cedi by over 1%, coupled with competition among the various OMCs; the Institute for Energy Security (IES) can project fuel prices to drop slightly at the pump on the local market. Some major OMCs have kicked started the reduction already, and it is expected that the others, especially the relatively small OMCs will follow suit.
Principal Research Analyst