Fuel price forecast to fall next week on stronger Taiwan unit
September 24, 2016, 12:22 am TWN
TAIPEI--Gasoline and diesel prices in Taiwan are likely to fall slightly next week as a stronger Taiwan dollar has offset an increase in international crude oil prices, market sources said Friday.
The strength of the New Taiwan dollar is expected to lead to a price cut at the pumps of the state-owned CPC Corp. Taiwan, with gasoline and diesel prices likely to fall by NT$0.1 (US$0.003) per liter next week, the sources said. CPC cut its domestic fuel prices by NT$0.2 per liter this 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 weekly floating price formula, the price per barrel of crude oil was US$43.90 as of Sept. 22, down from US$43.97 the previous week, despite the latest increase in international crude prices, the CPC website shows.
If CPC implements a price cut next week, prices at the pump will fall to NT$20.1 per liter for super diesel, NT$22.6 per liter for 92 octane unleaded gasoline, NT$24.1 and per liter for 95 octane unleaded, and NT$26.1 per liter for 98 unleaded, according to the sources.
CPC is scheduled to announce its price adjustments at noon Sunday and put them into effect at midnight.
As of Thursday, the New Taiwan dollar had risen more than 0.9 percent this week against the U.S. dollar, which helped to moderate the effects of higher global oil prices and other international factors.
Anticipating the U.S. Federal Reserve's decision not to cut its key interest rates at this time, foreign investors had been moving funds into Taiwan even before the conclusion of the Fed policymaking meeting on Sept. 21, which helped boost the Taiwan dollar, the sources said.
The sources said oil imports are cheaper because of the stronger New Taiwan dollar, despite an increase in international crude oil prices after the United States reported a decline in oil inventories for the previous week.
According to the U.S. Energy Information Administration (EIA), U.S. oil stocks fell by 6.2 million barrels last week, the second biggest drop in a year, although the market was expecting an increase of 3.25 million barrels.
The higher New Taiwan dollar also cushioned Taiwanese oil importers from the impact of a likely decision by the member states of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC members to take action to stabilize the global oil market, the sources said.
The OPEC and non-OPEC members are scheduled to meet in Algeria next week to discuss a possible production freeze.