08-Oct-2008, 12:40 PM
Join Date: Nov 2005
Good news: Petrol price down
More price cuts expected...?
Oct 7, 2008
Pump prices cut by 5 cents
Eighth cut since July; more expected in coming months
OIL companies on Tuesday cut pump prices here for the eighth time since July amid a worsening economic crisis in the United States and Europe that has driven oil prices to near 12-month lows.
They lowered petrol and diesel rates by five cents a litre across the board. With the reduction, 92, 95 and 98-octane petrol now cost $1.863, $1.896 and $1.97 a litre respectively before discount.
Shell's V-Power is now $2.099, while Caltex Platinum is $2.096 a litre. Diesel, the fuel of commerce, is $1.703 a litre.
The latest adjustment came as the price of crude oil fell below US$90 a barrel on Monday from a high of US$148 in July.
On the New York Mercantile Exchange, November-dated oil fell by US $4.13 on Monday to US$89.75 a barrel. Brent crude was down by US$4.49 to US$85.76.
Oil prices have been falling as the economic turmoil in the United States and Europe, spurred by the worldwide credit crisis, dampens demand. Drivers have also been switching to more fuel-efficient cars and cutting back on discretionary trips.
With the latest cuts, petrol prices are down 39 cents a litre since their July highs, while diesel is 33 cents lower.
Oil industry consultant Ong Eng Tong said pump prices should have been reduced more. 'A US$1 drop in crude oil price roughly translates to a one-cent drop in pump price here,' he said.
Mr Ong expects prices to slide even further in the coming months.
'Petrol demand in the US is down,' he noted. 'The US is the world's biggest consumer. Whatever the demand there affects prices everywhere else.'
But Mr Ng Weng Hoong, editor of energy news portal EnergyAsia.com, said oil will resume its northward trek in the long term.
'The most recent analyses by the International Energy Agency and Opec predict that world demand will still be growing,' he said. 'No one is predicting a contraction in demand. 'The world will still be using more oil despite the financial crisis.'
He said when financial giants like Lehman, UBS, Morgan Stanley and AIG crumpled, 'they were forced to liquidate their long positions in oil and commodities'.
'That's why prices collapsed,' he explained.
He added that Washington's bailout plan will have an inflationary effect on the cost of goods, including oil.
But should the bailout fail, 'watch for rioting and geopolitical conflicts to escalate'.
'An unstable political environment will also prove bullish for oil,' he said.
what comes around goes around comes around goes around comes...