Cedi Depreciation Threatens Fuel Price Stability

Local Fuel Market Performance
Fuel prices rose between 3.6% and 4.9% within the second Pricing-window for the month of February 2017. These increments were effected by almost all the Oil Marketing Companies (OMCs) within the session. As a result, Gasoline and Gasoil is currently selling at Ghs 4.23 per litre and GHs 4.1 per litre on average terms.

IES-Scan indicates that Lucky Oil, Frimps Oil, Goil and Puma Energy are few of the OMCs selling the cheapest Gasoil and Gasoline on the market as at today.

World Oil Market Indices
Over the last thirteen (13) days, the Benchmark Brent crude price remained relatively stable on average terms to close the Pricing-window at $56.0 per barrel. The stability in price was as a result of producers outside OPEC that signed up to its output cut lagging on implementation of the deal and also significant rise in U.S oil inventories as reported by Energy Information Administration (EIA).

Platts also reported a marginal increment in global prices of both Gasoline and Gasoil. Gasoline price rose by 1.02% within the period under review, and in similar fashion Gasoil price rose from $484.14 per metric tonne to $485.35 per metric tonne, indicating a percentage rise of 0.24.

Local Forex and Fuel Inventory
The U.S Dollar continues its onslaught on the Ghanaian Cedi, with data from the banking sector indicating that the Ghana Cedi slipped further by an average of 3.7% to Ghs 4.55 against the dollar, from an opening of Ghs4.38. It is worrying that from the first pricing-window in January 2017 to date, the cedi has depreciated by over 10%.

The combined stock of Gasoline and Gasoil in-tank increased from 117,900 metric tonnes to 134,750 metric tonnes in the last window, capable of meeting almost 3 weeks of national demand.

PROJECTIONS FOR MARCH 2017 FIRST PRICING-WINDOW
The relative stability for the price of Brent crude, and the global prices for Gasoline and Gasoil points to the stability of local fuel prices. The only variable that threatens the stability of prices on the local market is the steep decline in the value of the Ghanaian Cedi against the U.S Dollar.

The expectation of the Institute for Energy Security (IES) is that the managers of the Ghanaian economy will work to halt the fall in value of the Cedi which is posing a huge challenge for oil importers.

Signed: RICHMOND ROCKSON
Principal Research Analyst
Contacts: 0244871916/ 0207997227/0555990054