MANILA -- The current price of Dubai crude oil in the international market is now over USD80 per barrel but oil futures predict declining levels in 2019.
In an economic bulletin Wednesday, the Department of Finance (DOF) said oil prices remain volatile due to combination of factors that include trade war concerns, US’ sanctions on Iran and declining Venezuelan oil production.
“While Dubai oil price levels for the next six months using October 8 futures prices would have required suspension of the adjustment in excise tax for the next six months, the latest price levels show otherwise,” it said.
Citing S&P Global Platts data, the economic bulletin said oil futures as of October 8, 2018 is about USD82.577 per barrel for this month and the level is seen to go down in the coming months.
Oil futures for November and December, as of October 8, is about USD81.73 per barrel and USD81.11 per barrel, respectively.
During the same day, oil futures for January next year is pegged at about USD80.72 per barrel and the decline is seen to continue with the December 2019 level placed at USD75.99 per barrel.
Futures prices for October this year, as of October 11 this year, stood at USD81.846 per barrel, lower than the level three days back and the rate even went down on October 12 to USD80.188 per barrel.
By the end of this year, the futures price as of October 11 is at USD80.031 per barrel while it is at USD77.482 per barrel as of October 12.
By the end of next year, oil futures was pegged at USD75.184 per barrel last October 11 while it is USD73.097 per barrel last October 12.
Thus, the Bangko Sentral ng Pilipinas (BSP) has proposed new medium term crude oil assumptions for 2018-22.
Under the current assumptions, crude oil price for 2018 is USD55-70 per barrel while it is USD50-65 per barrel for 2019-22.
The BSP proposal, however, are higher levels, with the 2018 figures at USD70-75 per barrel, the 2019, USD75-85 per barrel; 2020, USD70-80 per barrel; and USD65-75 per barrel for 2021-22.
With the current global oil prices breaching the USD80 per barrel mark, economic managers have proposed the temporary suspension of the second installment of the oil excise tax increase, an additional PHP2 per liter for both diesel and gasoline.
This, as the Tax Reform for Acceleration and Inclusion (TRAIN) law provides that the excise tax increase for 2019 may be suspended if prices of oil in the last three months of the year averages at USD80 per barrel.
Meanwhile, even as latest oil futures points to a declining level, a Department of Finance (DOF) official believes that this will still change in the coming days given the developments overseas.
“Experts tell us that prices are very volatile and will go back up due to Iran sanctions starting November 4 and Venezuela’s declining exports,” Finance Undersecretary Gil Beltran said. (PNA)
