The Petroleum Products Pricing Regulatory Agency has announced a new price band of N140.80 to N143.80 per litre for Premium Motor Spirit, also known as petrol. According to the agency, the recommended petrol retail band for a litre of petrol is now between N140.80 and N143.80. This follows an increase in crude oil prices on the back of energy report that showed that crude inventories plunged more than expected. Brent crude gained 1.1 per cent, to trade at $41.73 a barrel while U.S. crude was up 1.27 per cent, to trade at $39.77 a barrel. U.S crude inventories plunged by 8.2 million barrels to 537 million barrels, against experts’ forecasts for a draw of 710,000 barrels. Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note sent to Nairametrics, explained the bullish bias currently happening in the energy market. He said:
“Oil prices jumped after settling -1.08 % when The American Petroleum Institute (API) survey estimated a significant draw in crude oil inventories of 8.156 million barrels for the week ending June 26, which was much higher than analysts guesses. However, bullish appetites could be tempered somewhat as distillate inventories were up by 2.638-million barrels for the week, compared to last week’s 2.605-million-barrel draw. And in contrast to the headline number, Cushing inventories reported a small build of 164,000 barrels.” Innes continued by giving a detailed analysis of what seems to be an evaporated oil output glut market, even with concerns about COVID-19 arising.
“The oil market has had a busy 24 hours digesting a stream of headlines, the onslaught of grim warnings around global Covid19 concerns notwithstanding. But without question, if the API estimates are vetted by the official government agency data due out tomorrow, this will be viewed as a definite bullish signal. The reports could go a long way to easing some of those lingering inventory concerns. And possibly there is enough oomph in today’s announcement to trigger a retest of the psychologically important WTI $ 40 before tomorrow’s EIA release.” The virus continues to spread around the world with ever-increasing rates of infection. Cases now total more than 10 million with more than half a million people dying after contracting COVID-19.
The PPPRA, in a circular dated July 1, 2020 to marketers signed by Abdulkadir Saidu, PPPRA executive secretary, said “please recall the provision for the establishment of a monthly price band within which petroleum marketers are expected to sell PMS at the retail stations, based on the existing price regime. “After a review of the prevailing market fundamentals in the month of June and considering marketers’ realistic operating costs, as much as practicable, we wish to advise a new PMS pump price band of N140.80 – N143.80/litre for the month of July 2020.” Saidu said the new ex-depot price includes the statutory charges of bridging fund, marine transport average, national transport allowance (NTA) and the administrative charge. He also advised all petroleum marketers to operate with the price band advised by the agency.
The federal government, in March, announced that the retail price of petrol would be adjusted monthly to reflect realities in the global crude oil market. The pump price was fixed at N125 per litre in March and was reviewed downwards in April to N123.50. In May, only the ex-depot price was reviewed downwards to N108 and the retail price was adjusted to N121.50 in June.