The days of cheaper fuel at the pumps are numbered as crude oil prices have been rising for the past two months.
This week, Botswana energy authorities had to adjust the retail prices of fuel in response to the developments in the international markets.
According to Gabaake Gabaake, the Permanent Secretary at the Ministry of Minerals, Energy and Water Resources, the retail prices for both unleaded and leaded replacement petrol will increase by 56 thebe a litre.
He said price of diesel will go up 55 thebe per litre while illuminating paraffin will increase by 18 thebe per litre.
“The price adjustment is caused by the increase in the crude oil prices between the month of April and May 2009,” stated Gabaake.
International crude oil prices averaged US$57.30 in May from an average of US$50.18 per barrel in April 2009, while crude oil prices between April and May have increased by an average of 14.19 percent.
This is the first upward adjustment for 2009. The last time fuel prices were adjusted was in January 2009 when petrol went down by 50 thebe.
The new prices were effective Friday.
Meanwhile, Bloomberg reported on Friday that oil fell from a seven-month high after a record plunge in European industrial production prompted speculation that bets on an economic recovery are premature.
Futures declined more than US$1 a barrel after a report showed that output in the euro region dropped 21.6 percent from a year earlier. The dollar strengthened, undermining investors’ need to use commodities as an alternative investment. OPEC said members raised production in May for a second month, straying further from quotas.
“Crude had such a powerful rally that it was vulnerable to a correction,” said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. “The negative economic numbers from the euro zone got it going. The dollar got stronger on the news from Europe, which has hit crude.”
Crude oil for July delivery fell US$1.41, or 1.9 percent, to US$71.27 a barrel at 9:05 a.m. on the New York Mercantile Exchange. Futures dropped as much as US$1.88, or 2.6 percent, to US$70.80. Oil has gained 60 percent this year.
On Thursday, the contract rose US$1.35, or 1.9 percent, to US$72.68 a barrel, the highest settlement since Oct. 20. Prices, which are up 4.1 percent sine June 5, are heading for a fourth straight weekly gain.
“We’ve already taken out yesterday’s low of US$71.32 and now I’m waiting to see if we can break through the US$70.50 region,” Bentz said. “If we can break through that area, we will head toward US$70 on a retracement.”
Production in the 16-member euro region plunged the most since the data series started in 1986, the European Union’s statistics office in Luxembourg said today. Economists expected a 19.8 percent decline, according to a Bloomberg News survey. From March, output declined 1.9 percent.
“The market has excessively priced in the idea that a demand recovery is imminent,” said Eugen Weinberg, an analyst with Commerzbank AG in Frankfurt. “Upbeat sentiment might drive prices higher in the short term, but later in the summer fundamentals will play a larger role and a massive price correction is likely.”
The 11 members of the Organization of Petroleum Exporting Countries bound by production targets, all except Iraq, pumped 25.903 million barrels a day in May, an increase of 118,800 barrels a day from April, the Vienna-based group said in its monthly oil report today, citing secondary sources that include estimates from analysts and news organizations.
OPEC has implemented 75 percent of planned output cuts of 4.2 million barrels a day, compared with 77 percent in April, based on data in the report.
Brent crude for July delivery fell US$1.22, or 1.7 percent, to US$70.57 a barrel. Yesterday, the contract rose 99 cents, or 1.4 percent, to US$71.79 on London’s ICE Futures Europe exchange, the highest settlement since Oct. 20. (Sunday Standard/Bloomberg)