Motorists will pay a little more for diesel next month, while petrol prices were again cut sharply by the Government.
That reflects changes in seasonal demand under a new market-driven fuel price regime.
Since floating fuel prices were introduced at the beginning of August – with a 24 per cent increase for petrol and a 29 per cent cut for diesel – petrol prices have since fallen almost twice as fast as those for diesel.
That has brought the price-per-litre of diesel and Super 98 petrol almost into line for October, at 1.89 a litre and 1.90 a litre, respectively.
Fuel prices for August through October have been set by a Ministry of Energy-led committee using “benchmark prices”, which they have not yet disclosed to the public.
However, their price changes seem to be tracking fairly closely those for wholesale diesel and petrol shipments from Singapore refineries bound for Arabian Gulf destinations, as set by Platts, a widely used oil market pricing agency.
Platts’ prices for diesel have declined by 7.7 per cent from July through September.
That is compared to the Government’s cut of 7.8 per cent for diesel prices at the pump set during the same period.
The Platts unleaded petrol wholesale prices for 95 octane have fallen 14 per cent over the past three months, while the government has cut petrol prices by between 15.5 and 17 per cent.
The October uptick for diesel prices – even while oil prices fell last month – are in line with typical seasonal changes.
“Singapore gasoline and diesel prices, as with every market in the world, are affected by the very strong US market seasonality,” said Jonty Rushforth, head of global oil pricing at Platts.
In the US, the summer “driving season”, typically brings an upswing in demand for petrol through Memorial Day and early summer, then a decline as the end of the summer approaches on Labor Day.
Similarly, there is often an increase in the price of middle distillates (which includes heating oil and diesel) as the colder northern hemisphere weather approaches.
The overriding influence on fuel prices, however, is the price of crude, which has been weakening for most of the past year and a half.
Petrol prices at US filling stations are down about 17 per cent this year compared with last year and by 28 per cent from the year before.
The direction of fuel prices for UAE drivers will be mainly guided by oil’s movements over the next few months, which remain as hard as ever to predict.
Most market watchers, including analysts at Wall Street banks, have been lowering their forecasts for oil prices in recent weeks, although their track record is notoriously poor.
As Mr Rushforth points out, the demand for petrol in most markets this year has been surprisingly strong, partly driven by pump prices being relatively cheap. The decline in average petrol prices has been much lower than the decline for crude prices.
A report by Bloomberg yesterday suggests that speculators are now primed to push oil prices higher.
Data show that the bets speculators make that oil prices will rise in coming weeks have shot up by 15 per cent in the past week, the biggest rise since the start of the year. Such bets are often enough on their own to push up oil prices and are a good short-term indicator.
Looking further out, Mr Rushforth says, petrol and diesel markets are also going to be affected by some big structural changes from the industry, which is responding to changes in demand for petrol and other products, especially in Asia.
In the meantime, UAE motorists will have to adjust to such market-driven swings.
amcauley@thenational.ae
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