Domestic fuel prices seen likely to drop next week

Domestic fuel prices are expected fall next week, after three weeks of increases, as global crude oil prices have dropped, market sources said Friday.

With the decrease in international crude oil prices this week on the possibility of an oversupply, the state-owned CPC Corp. Taiwan (??) is likely to cut its gasoline and diesel prices by NT$0.3 (US$0.009) per liter next week, the sources said.

This week, CPC raised its fuel prices by NT$0.10 in the wake of a crude oil price increase last week.

The state-run oil company calculates its weekly fuel prices based on a weighted oil price formula that comprises 70 percent Dubai crude and 30 percent Brent crude.

Based on that formula, the price per barrel of crude oil stood at US$45.36 as of Sept. 1, down from US$46.85 the previous week, following the latest increase in international crude prices, according to the CPC website.

If CPC implements the NT$0.3 price cut next week, prices at the pump will fall to NT$20.6 per liter for super diesel, NT$23.1 per liter for 92 octane unleaded gasoline, NT$24.6 per liter for 95 octane unleaded, and NT$26.6 per liter for 98 unleaded, according to the sources.

However, if international crude oil prices fall further Friday, CPC's fuel price cut may be bigger, the sources said.

A report released by the U.S. Energy Information Administration on Wednesday pointed to higher than expected oil inventories in the U.S. market, which spooked energy traders, the sources said.

According to the EIA report, U.S. crude stockpiles grew by 2.3 million barrels last week, increasing for the second straight week and rising above the market's expectations of an increase of 921,000 barrels.

The U.S. dollar's appreciation on expectations of an interest rate hike by the U.S. Federal Reserve also pushed down international crude oil prices this week, the sources said.

In addition, Russian Energy Minister Alexander Novak on Thursday was not optimistic about a potential production freeze by members and non-members of the Organization of the Petroleum Exporting Countries (OPEC), which are scheduled to meet later this month.

Novak's outlook helped drag down international crude oil prices Thursday, with West Texas Intermediate crude futures falling 3.45 percent in New York, and Brent, the global bench mark, dropping 2.88 percent in London.

CPC is scheduled to announce its price adjustments at noon Sunday and put them into effect at midnight.

Source: Focus Taiwan News Channel