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MANILA - Metropolitan Bank & Trust Co. has cut its forecast this year for fuel prices from an average of P57.5 a liter to P54.5 amid the softening in international oil markets.
In its latest research note, Metrobank said oil prices are expected to move moderately this quarter as the Euro debt crisis keeps financial markets depressed.
The slowdown in global demand for commodities has pulled down prices in the first quarter. Demand expectations for the rest of 2012 were dampened by the weak data from the US and China, bringing world market prices to levels seen two years ago, Metrobank said.
Among the commodity groups, energy products saw the biggest drop as seen in the World Bank's energy index easing by 3.6 percent year-to-date and decreasing by eight percent from April to May of this year.
Metrobank also noted that global crude prices have declined, with the West Texas Intermediate or WTI posting the biggest drop of five percent year-to-date, followed by the cuts in Dubai oil by 2.5 percent and Brent oil by 0.6 percent.
"The ensuing Euro debt crisis and signs of slowing in China have caused global oil demand to soften. The recent downgrades of Spanish banks have spurred concerns of contagion, with other countries such as Austria and Cyprus also reportedly hinting of a possible need for bailout plans," Mabellene Reynaldo, Metrobank research analyst, said.
While the New Democracy Party of Greece got majority votes, financial markets are awaiting if a coalition government will be formed, as this would weigh on whether the country will exit the eurozone, she said.
Other factors that contributed to softer oil markets are easing geopolitical concerns, especially with the start of international talks with Iran over its nuclear program, and announcements that oil firms will expand capacity.
The Philippines, being a net importer of oil, saw local fuel prices decline since April. As of the second week this month, oil firms have had nine consecutive price rollbacks, with biggest yet on June 11:
- P2.05 a liter for unleaded gas;
- P1.9 for diesel; and
- P2.5 for regular gasoline.
Diesel retails for P41.3 a liter and gasoline, P50.95, for net declines of P5.49 and P5.88, respectively, since January.
Despite the recent cuts, seasonal demand may put pressure on prices, Metrobank said. On top of that, additional stimulus by the US and Chinese governments may help drive up demand.
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