The gasoline is has fallen but why does the diesel prices keep climbing?

The gasoline is has fallen but why does the diesel prices keep climbing?​

News reports from the Oil Fuel Fund Office (OFFO) indicate that the Fuel Fund Management Committee has announced a charge for diesel users starting on August 10, 2022 at 0.95 baht per liter. On August 11, 2022, the rate was moved to 1.20 baht per liter. From the former, the oil fund gradually decreased to 0.24 baht per liter on August 9, 2022. As a result of the world oil price has been reduced steadily, but the Fuel Fund Management Committee still stands the diesel price at 35 baht per liter. however, the world oil price has been reduced steadily, but the Fuel Fund Management Committee still stands by the diesel price at 35 baht per liter.


However, the collection of money into the oil fund to manage liquidity for the oil fund as of August 7, 2022, which has a negative net position of 117,229 million baht, divided into

  • Negative oil accounts for the total of 76,784 million baht. 
  • The LPG gas account is negative 40,445 million baht. 
  • Cash flow from bank accounts is 1,225 million baht.

The reason why gasoline prices fell but the price of diesel doesn't.

  1. The Fuel Fund Management Committee’s collecting money into the diesel is to reduce expenses and support the account that is more than 100 billion baht in negative.
  2. The Ministry of Finance and Ministry of Energy still can’t find a source of loan or compensation to add liquidity to the fund.
  3. Keep the above-mentioned money, from the drop in world oil prices. to improve liquidity from subsidizing diesel prices for a long time
  4. While the price of gasoline has moved down, diesel hasn’t. because, in the past, the oil fund used to carry diesel prices primarily up to 14 baht per liter, spending almost 1,000 million baht per day.

Therefore, “If the world oil price situation continues to decline, we may see the price of diesel at the gas station drop below 35 baht per liter, but as I said, we have to look at the world market price and the oil fund together. Because collecting money into the oil fund is one thing, and another part still has to support the price. “But to bring the price down is the main intention,” the source said.

Mr. Wisak Wattanasap, director of the Office of the Fuel Fund, revealed that on August 8, 2022, the Fuel Fund Management Committee had considered weekly diesel prices. with a resolution to keep the price of diesel fuel at 34.94 baht per liter for the eighth consecutive week in order to help reduce people’s expenses Although the world market for diesel prices in the past week has increased.

However, the situation during the past week, the price of diesel (GAS OIL) falls by 10.52 dollars per barrel. On July 29, 2022, diesel prices were $134.86 a barrel and dropped to $124.34 a barrel on August 5, 2022. The main factor is the decline in crude oil prices. from the forecast of lower oil demand This was a result of concerns about the possibility of a recession at the end of this year, especially in the US and in Europe.

It also includes emerging market debt conditions. and controlling the spread of COVID-19 in China, which is the world’s largest oil importer. The US Energy Information Administration (EIA) reported that due to a slowdown in oil demand, the amount of US crude oil inventories has increased more than analysts expected. 

In terms of diesel prices, the Cabinet resolution on June 21, 2022, has put in measures to reduce the cost of living. with a measure to subsidize the price of diesel by 50% In the part where the selling price is higher than 35 baht per liter for 3 months (Jul-Sept 2022),

On the international market analysis team, PTT Public Company Limited (PTT) said that crude oil prices in the last week fell more than 5-8 dollars per barrel due to concerns over the global economic slowdown. The decrease in purchasing power of the people due to inflation may cause oil demand to slow down. Meanwhile, central banks around the world are raising interest rates to reduce inflationary pressures.

According to the US Commerce Department, the country’s trade deficit fell by 6.2 percent in June 2022. MoM was at $79.6 billion, while China’s General Administration of Customs reported its trade balance in July, 2022. The surplus rose to $3.32 billion, the MoM at $101 billion, a record high.

Amid global political tensions, especially between China and the United States on the Taiwan issue, On Sunday, the Chinese military said it would be maneuver on the eastern shores of the Yellow Sea from August 7–15, 2022; and the Bohai Sea from August 8–September 8, 2022. after a large maneuver around Taiwan on August 4–7, 2022, using real ammunition. in response to Speaker of the United States House of Representatives, Nancy Pelosi’s visit to Taiwan on August 2, 2022.

Factors affecting crude oil prices negatively

  • On August 4, 2022, the British Monetary Policy Committee voted for the Bank of England to raise its policy rate by 0.50% to 1.75%.
  • Mohamed Oun, Libya’s Minister of Oil and Gas, has said oil production resumed after the protests. increased to 1.2 million barrels per day from the beginning of July 2022 at 400,000 barrels per day.
  • Reuters reported that Russia’s June 2022 crude oil production rose 510 KBD, MoM to 9.78 MMBD.

  • On August 3, 2022, the Joint Ministerial Monitoring Committee (JMMC) meeting of the OPEC+ group resolved to increase the crude oil production quota in September 2022 to 101,000 barrels per day. The total quota was 43.96 million barrels per day.

  • The US EIA reported commercial crude reserves for the weekend of July 29, 2022, up 4.5 million barrels from the previous week to 426.6 million barrels, the highest level in two weeks, while gasoline demand fell 700,000 barrels per day from the previous week to 8.5 million barrels per day. 

Factors affecting crude oil prices positively

  • The US Department of Energy reports that the Strategic Petroleum Reserve: SPR for the week of July 29, 2022 fell 4.6 million barrels from the previous week to 469.9 MMB, the lowest in 37 years.

  • The Caspian Pipeline Consortium (CPC) in Kazakhstan, which operates a crude oil pipeline (1.6 MMBD) linking Russia’s Novorossiysk export port on the Black Sea, said the supply in the system had dropped significantly, and Reuters reported on August 3, 2022 that the Kashagan field (400,000 bpd) oil production had decreased by 80% to 27,000 bpd due to technical difficulties.

  • The Labor Department reported that non-farm payrolls in July 2022 rose by 528,000 from the previous month, while the unemployment rate fell 0.1% from the previous month to 3.5%, the lowest since February 2020.

Reference : bangkoknews

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