Petrol set to slide as OPEC dithers

Weekly petrol prices; US Election

Retail petrol: According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol rose by 3.4 cents per litre to 123.6 cents per litre in the week to November 6. Prices rose in all capital cities except Melbourne and Canberra.

US Election update: This morning (Sydney time), the Federal Bureau of Investigation (FBI) Director James B Comey said that the investigation into Hillary Clinton’s email practices had finished. The FBI has not changed the conclusions it had expressed back in July. The petrol figures have implications for retailers, especially petrol marketing groups.

What does it all mean?
Petrol prices were up last week but the blame goes almost solely to the vagaries of the discounting cycle rather than fundamental changes on global oil markets. The average Sydney petrol price rose almost 12 cents in the space of a week with Adelaide prices up 7 cents. Sydney and Adelaide prices are now on the way down from highs with Melbourne prices only slightly above cost price (the terminal gate price).
Petrol prices are set to slide given the failure of OPEC oil producers to reach agreement on a deal to restrict production. The Singapore gasoline price slid 7 per cent in US dollar terms last week and fell an even greater 8 per cent in Australian dollar terms – the biggest weekly fall in four months. Generally it takes 2-3 weeks for changes in global oil prices to affect pump prices. Pump prices may fall around 2 cents in the coming week.

OPEC oil producers next meet on November 30 and it is still possible for members to hammer out a production agreement, so there is no room for complacency. One sticking point is Iran – the country argues that it shouldn’t be subject to a production agreement given that it has only recently returned to the global market as a producer.

Financial markets have today responded to news that the FBI investigation into Hillary Clinton’s email practices had concluded with no change to the original findings. The Aussie dollar rose from US76.65 cents to above US77 cents before retracing. Sharemarkets in Asia have lifted by around 1 per cent. The US Dow Jones futures price has also lifted around 1.2 per cent in after hours’ trade.
What do the figures show?

Petrol prices
According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol rose by 3.4 cents to 123.6 cents a litre in the past week after falling by 1.6 cents in the previous week. The metropolitan petrol price rose by 4.3 cents to 122.8 cents per litre while the regional price rose by 1.6 cents to 125.4 cents per litre.

Average unleaded petrol prices across states and territories over the past week were: Sydney (up by 11.8 cents to 129.1 c/l), Melbourne (down 1.9 cents to 116.1 c/l), Brisbane (up by 4.2 cents to 121.2 c/l), Adelaide (up by 7.0 cents to 124.6 c/l), Perth (up by 2.2 cents to 123.7 c/l), Darwin (up by 1.4 cents to 129.1 c/l), Canberra (down by 0.1 cents to 129.0 c/l) and Hobart (up by 0.7 cents to 125.0 c/l).

The national average Australian price of diesel petrol was up by 0.7 cents to 123.1 cents per litre in the week to November 6. The metropolitan price rose by 0.9 cents to 123.1 c/l, while the regional average price was up by 0.6 cents to 123.1 c/l.

Today the national average wholesale (terminal gate) unleaded petrol price stands at 110.8 cents a litre, down by 1.9 cents a litre over the week. The terminal gate diesel price stands at 108.6 cents a litre, down by 1.5 cents a litre over the previous week.

Last week the key Singapore gasoline price fell by US$4.82 or 7 per cent to US$59.20 a barrel. In Australian dollar terms the Singapore gasoline price fell by $6.70 a barrel or 8 per cent to $77.08 a barrel or 48.48 cents a litre.
MotorMouth records the following retail prices for capital cities today: Sydney 126.4c; Melbourne 113.3c; Brisbane 135.2c; Adelaide 134.5c; Perth 118.1c; Canberra 128.7c; Darwin 129.1c; Hobart 125.3c.

What is the importance of the economic data?

Weekly figures on petrol prices are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum (AIP). National average retail prices are calculated as the weighted average of each State/Territory’s metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions. AIP data for retail petrol prices is based on available market data supplied by MotorMouth.
What are the implications for interest rates and investors?

Petrol prices are poised to fall in coming weeks, lifting consumer spending power in the all-important lead-up to Christmas.

Petrol is trading around 4 cents a litre lower than a year ago and around 17 cents lower than two years ago. Simply, petrol isn’t overly influencing spending decisions at present.

Financial market uncertainty will persist until the US election results are fully known Wednesday afternoon (Sydney time).

Extracted from The Bull