Diesel and petrol prices to fall “significantly”, says IES

The Institute for Energy Security (IES) has predicted that prices for fuel will drop significantly at the pump “due to the 6.60% appreciation of the cedi against the US dollar”.

“With the continued price falls recorded on the international market, consumers are set to see further price relief at the pumps,” said a statement by the IES published on Tuesday (13 December) .

“”The Institute for Energy Security (IES) predicts that on the back of 9.02%, 8.08% and the 7.38% fall in prices of gasoline, gasoil and LPG, respectively, the domestic OMCs outlets are set to reduce their prices further.

“The expected price drops would be significant due to the 6.60% appreciation of the cedi against the US dollar. The IES foresees the price of the various finished products reducing between 9% to15%. This means the new prices will fall around GHC13 and GHC16 per litre for gasoline and gasoil respectively, and GHC12 per kilogram for LPG,” the statement added.

See below for the full statement:

DIESEL, PETROL PRICES TO REDUCE FURTHER BEFORE YEAR ENDS
REVIEW OF DECEMBER 2022 FIRST PRICING WINDOW

Local fuel market performance
The first pricing window of December 2022 saw international market price falls, reflecting on the domestic fuel market positively at all Oil Marketing Companies (OMC) outlets monitored by the Institute for Energy Security (IES). The price reductions seen over the first half of December 2022 pegs the national average price per litre of Gasoline at Gh¢15.16 from Gh¢16.31, representing a 7.05% reduction over the period. Gasoil’s national average price per litre moved from Gh¢19.86 to Gh¢18.78; falling by roughly 5.44%.

In the pricing window under review, the IES MarketScan picked Shell/Vivo, TotalEnergies, Engen, Sel and Goil as OMCs with the highest-priced fuel on the market. Star Oil, Benab Oil, Zen Petroleum, and Goodness Oil were spotted as some of the OMCs with the least-priced fuel on the market.

World oil market
International Crude oil benchmark Brent fell by 8.09% in price over the previous window’s average price of $89.11 per barrel to the present average price of $81.90 per barrel.

Oil prices plummeted to their lowest point of the year in this window despite OPEC and its allies’ recent announcement to continue reducing supplies, as concerns about a worldwide recession trumped supply restrictions.

Global oil prices have tumbled more than 20% as the threat to production from the G7 Russia price cap has receded allowing traders to refocus on the deteriorating outlook for consumption. Brent futures prices have slumped to less than $77 per barrel from a recent high over $98 just a month ago in early November.

Oil prices could witness further downtrend in the new window as recession fears continue to fuel demand concerns, with European price cap on Russian oil remaining a source of uncertainty

World fuel market
The Global Standard & Poor’s (S&P’s) Platts averages monitored over the last pricing window indicate that the price of gasoline continues to fall, with price in the period under review dropping by 9.02% from $838.78 per metric tonne to $763.10 per metric tonne.

Gasoil price also further dropped by 8.08% from $969.70 per metric tonne to $891.30 per metric tonne.

The LPG price also followed in same direction, falling by 7.38% from $618.20 per metric tonne to $572.58 per metric tonne.

Local forex
Data from the IES Economic Desk, as captured from the foreign exchange (forex) market over the last two weeks, shows the local currency made gains, appreciating by 6.60% against the US dollar.

The rate at close of the period under assessment was GHC14.03 to the US dollar from the previous rate of GHC4.96, to the US dollar.

IES PROJECTIONS FOR DECEMBER 2022 SECOND PRICING WINDOW
With the continued price falls recorded on the international market, consumers are set to see further price relief at the pump.

The Institute for Energy Security (IES) predicts that on the back of the 9.02%, 8.08% and 7.38% falls in prices of gasoline, gasoil and LPG, respectively, the domestic OMCs’ outlets are poised to reduce their prices further.

The expected price drops would be significant because of the 6.60% appreciation of the cedi against the US dollar. The IES foresees the price of the various finished products reducing by between 9% and 15%.

This means the new prices will fall to round GHC13 and GHC16 per litre for gasoline and gasoil, respectively, and GHC12 per kilogram for LPG.

Signed:
Fritz Moses
Research analyst, IES
([email protected] )