Fuel costs for cars will be 5 per cent cheaper for UAE residents starting on Saturday as petrol prices fall for a fourth consecutive month amid a weak oil market.
The UAE Ministry of Energy announced on Tuesday that consumers will pay Dh1.86 a litre for Super 98, a 5.1 per cent drop from last month’s figure of Dh1.96.
Special 95 will decline 5.41 per cent to Dh1.75 from Dh1.85, and E Plus will cost Dh1.68, down from June’s Dh1.78. Diesel prices will drop to Dh1.84, a 3.16 per cent slide from last month.
The latest petrol prices are, on average, 2 fils below prices seen for the same month last year.
The cost of petrol in the UAE has fluctuated for nearly two years, since the Ministry of Energy began liberalising fuel prices using “benchmark prices” which have not been publicly disclosed.
Fluctuations in the oil market impact the price of petrol and diesel as the two are by-products of crude. The price of Brent crude, the international benchmark, has fallen this month, hitting its lowest point of the year last week at US$43 a barrel.
The main problem is the market needs to swallow all of the excess supply still finding its way into the supply chain, said Eugene Lindell, an oil market analyst at JBC Energy consultants. This has thrown the market into a constant contango, or where the spot price is lower than the forward price.
More oil from the United States as well as Nigeria and Libya is putting pressure on the market. “Production will still increase for a few months as there’s a lag effect,” Mr Lindell said.
Looking at the forward curve, it seemed as though contango was being reversed. “Around the end of next year, the prices tipped to backwardation and then was nearly flat before heading into contango again,” he said. “Now it’s just more or less constant contango and that’s a sign that the market is in a bear mode right now.”
OPEC members and 11 non-members, including Russia, agreed in May to extend output cuts by 1.8 million barrels a day into next year. OPEC members Nigeria and Libya were exempt from the agreement.
Despite recent cutbacks in oil production by Opec and others, producers are struggling to stabilise prices, with US shale and other sources adding to the oversupply, according to the London-based investment management firm Sun Global Investments.
“It’s difficult to be bullish about oil prices in the medium term,” said Mihir Kapadia, Sun Global’s chief executive and founder.
lgraves@thenational.ae
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UAE players with central contracts
Rohan Mustafa, Ashfaq Ahmed, Chirag Suri, Rameez Shahzad, Shaiman Anwar, Adnan Mufti, Mohammed Usman, Ghulam Shabbir, Ahmed Raza, Qadeer Ahmed, Amir Hayat, Mohammed Naveed and Imran Haider.
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Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
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Company Profile
Name: Thndr
Started: 2019
Co-founders: Ahmad Hammouda and Seif Amr
Sector: FinTech
Headquarters: Egypt
UAE base: Hub71, Abu Dhabi
Current number of staff: More than 150
Funds raised: $22 million
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Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
UAE currency: the story behind the money in your pockets
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Will the pound fall to parity with the dollar?
The idea of pound parity now seems less far-fetched as the risk grows that Britain may split away from the European Union without a deal.
Rupert Harrison, a fund manager at BlackRock, sees the risk of it falling to trade level with the dollar on a no-deal Brexit. The view echoes Morgan Stanley’s recent forecast that the currency can plunge toward $1 (Dh3.67) on such an outcome. That isn’t the majority view yet – a Bloomberg survey this month estimated the pound will slide to $1.10 should the UK exit the bloc without an agreement.
New Prime Minister Boris Johnson has repeatedly said that Britain will leave the EU on the October 31 deadline with or without an agreement, fuelling concern the nation is headed for a disorderly departure and fanning pessimism toward the pound. Sterling has fallen more than 7 per cent in the past three months, the worst performance among major developed-market currencies.
“The pound is at a much lower level now but I still think a no-deal exit would lead to significant volatility and we could be testing parity on a really bad outcome,” said Mr Harrison, who manages more than $10 billion in assets at BlackRock. “We will see this game of chicken continue through August and that’s likely negative for sterling,” he said about the deadlocked Brexit talks.
The pound fell 0.8 per cent to $1.2033 on Friday, its weakest closing level since the 1980s, after a report on the second quarter showed the UK economy shrank for the first time in six years. The data means it is likely the Bank of England will cut interest rates, according to Mizuho Bank.
The BOE said in November that the currency could fall even below $1 in an analysis on possible worst-case Brexit scenarios. Options-based calculations showed around a 6.4 per cent chance of pound-dollar parity in the next one year, markedly higher than 0.2 per cent in early March when prospects of a no-deal outcome were seemingly off the table.
Bloomberg
