Oil closed yesterday in New York at US$122.11 a barrel, concluding the last reference day of this week to fix internal fuel prices tomorrow from the 11th to the 17th of the current month in a scenario of expectations of whether the Government will maintain the subsidy scheme created on March 7.
The average price of US$115.00 per barrel referred to by the Government has already been left behind, at least for the price reference of the commercial week that begins the day after tomorrow.
On March 7, the Government announced a cushioning program for the effects of international increases in oil and raw material prices that included subsidizing fuels with the parameter that domestic prices would be maintained while the price of the West Texas Index (WTI) ) is above US$85 per barrel and below US$115. In this range, the Government would maintain the internal prices of hydrocarbons unchanged at the level of March 4, 2022. Since then, the prices of gasoline, the two types of diesel oil and liquefied petroleum gas have remained unchanged, and the Government has assumed a weekly fiscal sacrifice of between RD$600 million and RD$1,300 million.
The subsidy band was exceeded
The upper level of that band was exceeded during the days of last week and the first three of the current one, which are the reference ones to set the prices that will be established tomorrow, Friday, so there are expectations as to whether the subsidies with the increases in crude oil that have been recorded in recent days, including yesterday’s, which are the ones that complete the reference period used by the Ministry of Industry, Commerce and Mipymes to establish the weekly prices of hydrocarbons. The period is from Thursday to Wednesday. When he announced the measure of the subsidy in the range of 85-115 dollars, President Abinader explained that any movement in prices above US$115 dollars per barrel will be transferred to domestic prices, without the inclusion of the ad-valorem tax in the calculation of the same.
Expectations hover around whether the MICM will decide to adjust the prices of hydrocarbons in the absence of President Luis Abinader.
WTI at US$122.11
Yesterday in New York, the price of Texas intermediate oil (WTI) rose 2.3% and closed at 122.11 dollars, easily surpassing the psychological barrier of 120 dollars, with which it has been flirting for several sessions.
At the close of trading on the New York Mercantile Exchange (Nymex), WTI futures contracts for July delivery rose $2.7 from the previous close.
The Energy Information Administration (EIA) reported today that US oil inventories increased by 2 million barrels last week, leaving reserves at 416.8 million barrels. However, gasoline inventories were reduced by 800,000 barrels.
The American Petroleum Institute (API, according to its acronym in English) had advanced on Tuesday that crude oil inventories in the country would increase by 1.8 million barrels last week and that gasoline inventories would grow by another 1.8 million.
Market under upward pressure due to more demand
Analysts point to the unexpected increase in gasoline demand as the spur that has triggered the price of black gold. “The market remains extremely tight and that keeps the upward pressure on crude prices,” said market analyst Craig Elman of Oanda. For him, moreover, the increase in production promised by the OPEC+ countries, especially by Saudi Arabia, “was more a symbolic gesture than a substantial one.
