DIESEL fuel prices have continued to rise in recent months, in response to COVID-related production cuts by the world’s major fuel oil suppliers.
The latest monthly report from the Australian Institute of Petroleum shows retail diesel prices in regional (non-metropolitan) areas of Australia last week averaged 142.9 cents / liter, an increase of 5 cents / l over the past month and 21 cents / l more than at the same time last year. .
The average wholesale price of diesel last week was 131.6 cents / liter, its highest level since March 2020.
Prices varied from state to state, with Queensland regional retail diesel the cheapest, averaging 141.1 c / l, and the Northern Territory the highest, at 178.1 c / l. l. Prices in New South Wales in regional areas last week were on average 143c / l, and in Victoria, 141.8c / l.
As part of its quarterly report monitoring the prices, costs and benefits of supplying petroleum products to the petroleum industry in Australia, the Australian Competition and Consumer Commission said that production cuts by Oil by the OPEC cartel and other major producers, combined with a rebound in global demand for fuel, had driven fuel prices up in Australia’s five largest capitals in the last quarter. Although his report focuses on gasoline rather than diesel, the broader trends apply to both fuels.
“What we are experiencing in Australia is a ripple effect of rising international prices for crude oil and refined gasoline,” said ACCC President Rod Sims.
Over the past 40 years, international crude oil prices in inflation-adjusted terms have averaged around US $ 61 per barrel. In March 2021, monthly average crude oil prices were above this long-term average for the first time since December 2019.
âThe OPEC cartel controls a huge amount of the world’s oil supply,â Mr. Sims said.
âHis supply restriction agreements mean higher crude oil prices which largely influence the prices of refined gasoline and diesel. The higher price of Mogas 95 (the benchmark for refined unleaded regular gasoline in the Asia-Pacific region), means we pay more for Bowser-style gasoline, âhe said.
Fuel demand remains below pre-pandemic levels
Demand for gasoline in the March quarter remained below pre-pandemic levels, with gasoline sales volumes in Australia declining slightly between the December and March quarters.
In the second half of 2020, domestic fuel sales partially recovered when some COVID-19 restrictions were relaxed. However, closures in Brisbane, Perth, Melbourne and parts of Sydney, along with flooding in New South Wales and Queensland, contributed to a slight drop in sales in the March quarter, Mr. Sims.
Average sales volume for the quarter was approximately 7% lower than quarterly average sales volumes for calendar year 2019, but 7% higher than average quarterly sales volumes for calendar year 2020.
Unlike gasoline prices, which fluctuate wildly during a weekly cycle, there is no retail discount cycle (i.e. motorists, Australian Petroleum Institute AIP said.
Most diesel is sold in bulk to commercial / industrial / agricultural customers on long-term contracts, and these contracts are subject to stiff competition through regular tenders.
The Singapore diesel benchmark price (10 ppm Sulfur Diesel) was Australia’s main diesel benchmark price, the AIP said.
Crude oil is purchased in US dollars, which means that changes in the value of the Australian dollar against the US dollar have a direct impact on the relative price of crude oil in Australian dollars. Therefore, changes in the A $ / US $ exchange rate should be taken into account when considering movements in the price of crude oil, the AIP said.
Post-COVID demand on the rise
The latest monthly report from the International Energy Agency suggests that global demand for oil is expected to return to pre-pandemic levels by the end of 2022, increasing by 5.4 million barrels this year and 3 , 1 million additional barrels in 2022.
Global refinery throughput in 2021 is expected to recover half of the 7.4 million barrels lost in 2020, due to the impact of COVID on demand.