The Institute for Energy Security (IES), has been monitoring the downstream petroleum landscape in Ghana and the sub region and have realized especially in Ghana that Price Deregulation introduced last year has had a major impact in terms of daily petroleum price movement at the pump. During the first “Pricing window” for the month of June 2016, Oil Marketing Companies (OMCs) increased their prices by an average of 2% which IES contested, resulting in a sharp response by Goil of some 0.79% drop on a litre of petrol. This forced the other OMCs to follow sync to the extent that today most of the smaller OMCs are selling far below the price of Goil.
In the second Pricing window for the month of June 2016, (IES) can project fuel prices on the local market to fall. The Petroleum department of the Institute has considered the global trading trends of petroleum price since the last window and can comfortably project fuel price to drop on the Ghanaian market in the coming days.
Currently two major variables drive petroleum prices on the local market: Forex and world crude/Platt oil prices. IES can confirm that the world crude oil prices have fallen by more than 1.48% within the first pricing window. A review of Platt price, an industry trading benchmark as of today also indicates a drop in Petrol price by 1.8% with an accumulated price of 2.6% decrease within this window, whilst the Ghanaian Cedi has seen stability at the Forex market over the pricing window.
Due to these developments, the Institute for Energy Security (IES) can comfortably project fuel prices on the local market to drop between 1. 6 % to 2%. This is further supported by the facts that today the country’s fuel stock (Petrol and Diesel combined) is over 285,000 metric tons which serves as a huge motivation to the supply chain of the domestic market. Additionally, crude oil production is ramping up in the supply regions, while the economies of consuming regions like Asia and Europe is weakened suggesting a drop in demand of oil.
As a result, the IES sees no justification for an increment in fuel prices on the local market within the next window. We trust that all Oil Marketing Companies would ensure that the fundamentals guide them in their pricing for the next window which opens on 16th June 2016.
GILBERT RICHMOND ROCKSON
Principal Research Analyst (Petroleum Department)