Review Of March 2017 Second Pricing-Window

Local Fuel Market Performance
An interesting phenomenon occurred in the second Pricing-window for the month of March 2017. Oil Marketing Companies (OMCs) reduced twice the prices of fuel at the pump. The first reduction is attributed to the favourable market indicators as projected by IES prior to the beginning of the window. The second reduction was as a result of the removal of Excise Levy and the review of the Special Petroleum Tax from 17.5% to 15% by the government. In effect, prices at the pump dropped between 2.69% and 4.56%. At the close of the window, the national average pump price stood at GHs 4.21 per litre and GHs 4.18 per litre for Gasoline and Gasoil respectively.

Over the window, Frimps Oil sold the cheapest Gasoline and Gasoil, with both products being sold at GHs 4.145 per litre.

World Oil Market Prices
The average Platts prices for the second Pricing-window for both Gasoline and Gasoil dropped. The average price for Gasoline was recorded as $502.95 per metric tonne, representing a drop of 5.20% over the previous price of $530.63. Gasoil also dropped 5.9% to average $444.20 per metric tonne.

The Benchmark Brent crude price for the period under review also dropped from $53.5 per barrel to $51.5 per barrel, representing a percentage change of 3.73%. According to U.S Energy Information Agency, crude inventories continue to rise, compelling prices on the world market to drop further.

Local Forex and Fuel Stock
Data obtained from the banking sector suggest the Ghanaian Cedi made significant gains against U.S Dollar by appreciating 4.20%, thus from GHs 4.52 to GHs 4.33 within the period under review.

The inventory of Gasoline and Gasoil in the country rose over the period. Today, Gasoil stock can meet 4 weeks, 5 days of national consumption whilst Gasoline stock can match 4 weeks, 4 days of national consumption.

PROJECTIONS FOR APRIL 2017 FIRST PRICING-WINDOW
The price of Brent crude has fallen by 3.73%, Gasoline and Gasoil prices on the world market has also fallen by up to 5.90%, the Cedi made significant gains against the U.S Dollar, and the stock of fuel in the country has risen substantially. In view of these positive fundamental drivers, the Institute for Energy Security expects fuel prices at the pump to trade up to 1.8% below today’s national average pump prices.

Signed:
RICHMOND ROCKSON
Principal Research Analyst