Fuel prices to fall by 1.5 and 3%

Fuel prices are expected to fall by between 1.5 and 3% in the second-pricing window for November 2016, the Institute for Energy Security (IES) has projected.

“As a result of marginal loss of the Ghana Cedi to the U.S. Dollar, the up to 8.12 % reduction in the prices of finished products on the world market, the 8.10% drop in crude oil price, and the low stock of diesel in the country,” the IES said it “can project prices of diesel and petrol on the local market to drop by between 1.5 and 3.0% for the second pricing-window for the month of November 2016.”

Below is the analysis done by IES:

Local Fuel Market

Trading activities within first pricing-window for the month of November 2016 saw most Oil Marketing Companies losing their market share to Goil, Top Oil, Radiance Oil, Glory Oil and Allied Oil as these OMCs were selling the cheapest fuel on the local market. Shell (Vivo Energy), Total Petroleum Ltd, and Engen Petroleum reduced their prices marginally to compete for market share. Today, an average pump price for Petrol and Diesel is GHS 3.666 per litre and GHS 3.663 per litre respectively, indicating an average price drop of about 1.8%. The global gasoline (Petrol) supply glut as against huge supply-gap for Gasoil (Diesel) saw diesel prices at most pump stations being sold as the same price as Petrol and some instance higher than Petrol.

World Petroleum Market Indices

Over the last two weeks, the average Brent crude price dipped from $51.22/barrel to 47.07, a reduction of 8.10% following reports from Energy Information Administration (EIA) and International Energy Agency (IEA) suggesting that the global inventories continue to exceed demand; coupled with Russia and OPEC member countries not making good their word to freeze production.

Today the average Platt prices for Petrol and Diesel is $481.08/metric tonne and $418.81/metric tonne indicating a drop of 7.36% and 8.12% on the two fuels, as compared to $519.32/metric tonne and $454.98/metric tonne recorded last two weeks.

Local Market Index and Inventory

From data obtained from Bank of Ghana, the Ghana Cedi lost marginally against the U.S. Dollar over the first Pricing-window by 0.03% and it is expected to see a further depreciation (marginal though) as the Ghanaian general elections draws closer.

Combined stock of Petrol and Diesel held in-tank and on vessels offshore dropped from 445 million litres to 318 million litres, capable of ensuring 3-weeks supply of Diesel and 7-weeks supply of Petrol to meet national demand. Today, Petrol and Diesel stock in-tank and offshore stands at 195 million litres and 123 million litres respectively.

PROJECTIONS FOR NOVEMBER 2016 FIRST PRICING-WINDOW

As a result of marginal loss of the Ghana Cedi to the U.S. Dollar, the up to 8.12 % reduction in the prices of finished products on the world market, the 8.10% drop in crude oil price, and the low stock of Diesel in the country; the Institute for Energy Security (IES) can project prices of Diesel and Petrol on the local market to drop between 1.5 and 3.0% for the second Pricing-window for the month of November 2016.