Taipei--Domestic gasoline and diesel prices are expected to drop next week, after two consecutive weeks of increases, amid renewed concerns over a global supply glut in the international oil market, market sources said Friday.
Growing worry over crude oversupply after Libya increased output has sent international oil prices lower, which is likely to result in a price cut of NT$0.5 (US$0.017) per liter for gasoline and diesel at CPC Corp. Taiwan's (??) fuel pumps next week.
The state-owned company, which raised its fuel prices by NT$0.2 per liter this week, is scheduled to announce its prices for next week at noon on Sunday and put them into effect 12 hours later.
If CPC drops its fuel prices as forecast, prices at the pump will fall to NT$21.2 per liter for super diesel, NT$23.6 for 92 octane unleaded gasoline, NT$25.1 for 95 octane unleaded and NT$27.1 for 98 unleaded, the sources said. CPC calculates its weekly fuel prices based on a weighted oil price formula made up of 70 percent Dubai crude and 30 percent Brent crude.
With the fall in international crude oil prices, CPC has calculated the average price of crude oil at US$50.22 per barrel this week, down from NT$52.44 per barrel last week, according to its website.
The global oil market reacted Wednesday to the news that Libya, one of the major oil producers in the Organization of Petroleum Exporting Countries (OPEC), was increasing its crude output to 827,000 barrels per day.
The decision offset the effects of an agreement by OPEC and non-OPEC producers on May 25 to extend the current production reduction by 1.8 million barrels per day until March 2018.
With Libya's increased output, OPEC's production reached the highest level since October 2014, giving energy traders jitters over the oil production agreement, analysts said.
Libya and Nigeria are the two OPEC nations exempted from the production cut deal.
Although crude oil prices remained lower than last week, they were propped up somewhat Thursday by the U.S. Energy Information Administration's (EIA) report on a drop in crude oil inventories.
According to the EIA, crude inventories in the U.S. market in the week to May 26 dropped by 6.4 million barrels per day to 509.9 million barrels, way more than the market forecast of a 4.4 million-barrel decline.
Source: Focus Taiwan News Channel