Iran to add to oil supply and weigh on prices

Petrol

• Petrol prices: According to the Australian Institute of Petroleum, the national average Australian price of petrol rose by 0.3 cents per litre to 138.9 cents per litre in the week to July 19.
• Last week the key Singapore gasoline price fell by US$4.70 or 5.8 per cent to US$76.20 a barrel – a 14-week low.
• Interestingly figures from MotorMouth show that petrol prices have been falling for over three weeks in Melbourne. Meanwhile prices had fallen for around two weeks in Sydney, Brisbane and Adelaide before spiking higher mid to late last week. Only Perth operates in a uniform weekly cycle. 

What does it all mean?

• After sliding by the biggest margin in five months, petrol prices have lifted albeit modestly. But the lift in pump prices is largely been driven by the vagaries of the discounting cycle. More importantly there are better days ahead for Aussie motorists when it comes to cheaper fuel.
• The Iran nuclear deal with the West will lift sanctions on its oil exports – adding further to global supply and potentially depressing prices. The impact on oil prices will be determined by how quickly Iran can ramp up production. At present Iran is producing around 1.2 million barrels per day but Iran’s oil reserves are the fourth-largest in the world and its production capacity stands at about four million barrels a day — which would make it the second-biggest producer in OPEC. Analyst estimates vary, suggesting that oil production could be ramped up by around 1 million barrels per day within 6-8 months. In addition the added unknown is just how large are Iranian oil stockpiles, after having had sanctions in place for the last three years. The Singapore unleaded price fell almost US$5 last week to US$76.20 – a 14-week low. The slide in global fuel prices should keep domestic pump prices under downward pressure in coming weeks.
• Interestingly figures from MotorMouth show that petrol prices have been falling for over three weeks in Melbourne. Meanwhile prices had fallen for around two weeks in Sydney, Brisbane and Adelaide before spiking higher mid to late last week. Only Perth operates in a uniform weekly cycle. The bottom line is that Melbourne motorists are enjoying fuel at or below cost while motorists in other capital cities would be better off waiting as long as possible before filling up the family vehicle.

 

What do the figures show?

Petrol price:

• According to the Australian Institute of Petroleum, the national average Australian price of petrol rose by 0.3 cents per litre to 138.9 cents per litre in the week to July 19. The metropolitan petrol price rose by 0.6 cents to 137.8 cents per litre and the regional price fell by 0.3 cents to 141.2 cents per litre.
• The national average Australian price of diesel petrol fell by 0.2 cents to 134.7 cents per litre in the week to July 19. Last week the metropolitan price fell by 0.2 cents to 132.3 c/l, while the regional average price fell by 0.3 to 136.6 c/l.
• Average unleaded petrol prices across states and territories over the past week were: Sydney (up 1.9 cents to 139.9 c/l), Melbourne (down 7.0 cents to 130.7 c/l), Brisbane (up 5.1 cents to 142.9 c/l), Adelaide (up by 10.9 cents to 140.9 c/l), Perth (up 0.1 cents to 137.0 c/l), Darwin (down by 0.2 cents to 134.9 c/l), Canberra (down by 0.3 cents to 143.9 c/l) and Hobart (down by 0.3 cents to 143.5 c/l).
• Today, the national average wholesale (terminal gate) unleaded petrol price stands at 127.0 cents a litre, up 0.9 cents a litre on a week ago and still well up from the 6-year low of 100.4 cents per litre set on January 20.
• Last week the key Singapore gasoline price fell by US$4.70 or 5.8 per cent to US$76.20 a barrel – a 14-week low. Singapore gasoline previously hit a near 6-year low (lowest since March 2009) of US$52.20 a barrel on January 13. In Australian dollar terms the Singapore gasoline price fell by $5.29 a barrel or 4.9 per cent last week to $102.78 a barrel or 64.64 cents a litre.

What is the importance of the economic data?

• Weekly figures on petrol prices are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum (AIP). National average retail prices are calculated as the weighted average of each State/Territory’s metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions. AIP data for retail petrol prices is based on available market data supplied by MotorMouth.

What are the implications for interest rates and investors?

• Movements in the Aussie dollar will play a key part in determining what savings flow through to pump prices in coming weeks.
• CommSec expects interest rates to remain on hold over the rest of 2015.