Local retail oil price rise likely in days

Written by changthai11 on Tuesday, September 23rd, 2008

Local retail oil price rise likely in days

BANGKOK, Sept 23 (TNA) - Local retail fuel prices are likely to increase in the next few days if refined oil prices in Singapore soar in Tuesday night’s trading in tandem with the overnight oil price surge by US$16 per barrel registered in the United States, according to an industry executive.

Anusorn Saengnimnual, president of Bangchak Petroleum Plc, said he was shocked by skyrocketing oil prices in the past two days.

Refined oil prices in Singapore surged by more than $5 per barrel in Monday’s trading.

Should the prices further rise along with the US crude price hike, the marketing margin might be in deficit and local oil dealers willl need to raise retail oil prices in all categories.

However, he viewed biggest one-day increase in crude prices might only be temporary and would drop sharply because the US crude oil contract for November delivery stays at around $109 per barrel.

The US crude oil contract for October delivery, which expired on Monday, spiked as high as 24 per cent to $130 per barrel, before settling with a 15 per cent gain at $120.

Oil for November delivery, which becomes the front-month contract on Tuesday, rallied 5.6 per cent to $108.50 per barrel, but saw gains much smaller than October.

“The significant rise in the crude oil prices in Monday’s trading should be seen as a temporary phenomenon. Still, it is hard to guess the direction of oil prices,” he said..

“The marketing margin of retail oil prices averaged 1.80 baht per barrel (Monday).

Should the refined oil prices in Singapore increase further and the contribution to the State Oil Fund continue, the margin will definitely be in deficit and a price rise is unavoidable,” he said.

Veerapol Chirapraditkul, director of the Energy Policy and Planning Office, said the EPPO would need to monitor the oil price direction first.

Should the fuel price continue to stay higher, it would likely cut the contribution to the Oil Fund.

He said the ongoing oil price volatility stemmed mainly from a speculation.

Actually, he added, the current oil prices in the world market should stay at around $100 per barrel.