MOTORISTS are in for an unpleasant surprise this week—a hefty oil price increase that may whittle away the price reductions oil companies have implemented every week over the past two months.
Industry sources over the weekend said the projected price increase will be up to almost P2 per liter.
For diesel, oil firms are expected to raise their prices by between P1.75 and P1.95 per liter, while the cost of gasoline is seen increasing between P1.70 and P1.90 per liter.
Prices of kerosene are expected to go up between P1.75 and P1.85 per liter.
It will be the first substantial price increase that oil companies will implement since June this year.
Usually, oil firms adjust their prices every Monday or Tuesday.
A source said the increase is driven by improvement of prices of crude in the world market.
“The start of the week showed an improvement in the US financial situation,” he explained.
Another factor, the source said, was an increase in demand for gasoline and diesel in Africa.
“However, there is still oversupply of these products in Asia,” he added.
Prior to this, a series of price rollbacks was imposed by oil firms.
Last week, they lowered prices of gasoline by P1.45 per liter, diesel by 70 centavos per liter and kerosene by 90 centavos per liter.
Observers, however, were puzzled by the looming oil price increase, pointing out that oil prices in the world market had slumped to historic lows because of a glut.
Oil prices fell again on Friday as investors weighed the outlook for the US economy after mixed jobs data gave no clue on the timing for a Federal Reserve interest rate increase.
US benchmark West Texas Intermediate (WTI) for October delivery lost 70 cents, or 1.5 percent, at $46.05 a barrel on the New York Mercantile Exchange.
The global benchmark, Brent North Sea crude for October, closed at $49.61 a barrel in London, down $1.07, or 2.1 percent, from Thursday’s settlement.
“There isn’t any real optimism to support prices,” energy economist James Williams of WTRG Economics said.
The US August jobs report also on Friday was not clearly strong enough to raise the prospects for a Fed rate hike at the September 16-17 meeting of the Federal Open Market Committee, economists said, although some said the central bank would still lift its key zero-level rate next month.
The US economy added fewer jobs than expected last month but the unemployment rate fell from 5.3 percent to 5.1 percent, its lowest level since April 2008.
Citi Futures analyst Tim Evans said the market drop appeared in part because traders avoided risk before the long US holiday weekend.
Stock markets will be closed on Monday for the Labor Day holiday.
With global crude-oil supply persistently outweighing demand, oil prices have slid more than 50 percent from June 2015.
After volatile trade this week, WTI ended 1.8 percent higher and Brent lost 0.9 percent.
The Baker Hughes US oil rig count, closely watched for any sign of a slowdown in high US crude production, fell by 13 to 662, nearly 60 percent lower than a year ago.
“This mean fewer wells and less production going forward,” WTRG’s Williams said.
US crude-oil production fell by 119,000 barrels to 9.22 million barrels a day last week, according to Department of Energy data.
“The reality is that the world market is still oversupplied by about two million barrels a day,” Williams said.