Oil Prices Steady; Prices Rise at the PumpBy Peter Appleby | Tue, 07/14/2020 - 16:46
Oil prices have regained their footing after a morning of instability and a stumble last week that saw prices drop by around a dollar per barrel. During Tuesday’s trading, prices for the world’s major benchmarks fell by as much as 2.6 percent reports Bloomberg, before righting themselves following positive news on the production-cut efforts from OPEC+ countries Iraq and Nigeria, which had previously fallen short of their targets.
Last week, the reclosure of world cities following COVID-19 outbreaks shook the market while the US, one of the planet’s major oil consumers, confronts the world’s worst crisis. Yesterday, the US recorded an additional 58,858 new cases of the virus while the country’s death toll stood at 134,884, according to data from the Center for Disease Control and Prevention.
Mexico’s crude basket is now nearing the prices of its US and European counterparts with its most recent US$37.10 per barrel price just dollars off the US$40.16 and US$42.78 per barrel prices reported for WTI and Brent crudes, respectively.
Bloomberg reports that OPEC+ representatives will be meeting again next week but countries are expected to continue with their original plan of easing up on cuts from August onwards, from the 9.6MMb/d cut currently in force to 7.7MMb/d.
While international prices have reached more comfortable levels, prices at the pump for Mexican consumers have risen sharply. From the 15 percent price drop in March when consumers in certain parts of Mexico City could purchase a liter of regular gas at below MX$14 (US$0.62), prices are now hovering in the mid to high MX$19 (US$0.85) in the capital, according to price aggregator PetroIntelligence. ONEXPO’s Alejandro Díaz de León had stated that low prices would not last, but the large increase has added pressure to consumers during a time when finances are tight.
According to data from INEGI, prices for Magna gas have increased by 8.9 percent, while the Premium price has risen 6.7 percent. This is the highest hike for prices at the pump since Jan. 1, 2017, when Magna gas prices jumped 14.2 percent and Premium prices increased by 20.1 percent.
Mexico is currently split between red and orange on the COVID-19 traffic-light system that the government put in place to signal the severity of lockdown measures in each state. While red signifies the most restrictive lockdown, orange allows essential economic activities to take place. As states move from red and orange to yellow and green – full economic opening – drivers will return to the roads by the thousands. At this point, gasoline prices will become a focal point.