The prices of fuel in Ghana are expected to remain stable following the cedi’s appreciation against the dollar, the Institute for Energy Security (IES) has said.

The IES said in a statement on Thursday, 16 May 2019 said: “The cedi’s appreciation against the U.S. dollar could render the marginal increase in the prices of finished products on the international market negligible to be passed on to the final consumer. Whereas gasoline went up 1.24% and gasoil shot up by 0.09%, the market could play out favourably for consumers because of the gain of 1.15% the cedi recorded against the U.S dollar,”

It added: “It is important to note that while IES anticipates prices to remain unchanged due to the above, it is possible for some OMCs to reduce their prices in order to maintain or expand their market share in line with market realities as Frimps Oil did in the last window.”

Read the full statement below:

Local fuel market performance

Prices of petroleum products did not experience any movements within the first pricing-window of May 2019. The window saw Oil Marketing Companies (OMCs) selling Gasoline and Gasoil at an average price of GHS5.24 and GHS5.22 respectively. It must be noted that whereas prices remained largely unchanged across the board, some OMCs, such as Frimps Oil reviewed their prices downwards to compete for larger market share. As a result, Frimps Oil, Benab Oil and Pacific Oil sell the least-priced fuel on the market relative to other OMCs per IES Market-Scan. They are followed by Star Oil and SO Energy.

World Oil Market

Geopolitical developments around the world continue to weigh on the oil market putting traders in readiness for any eventuality, including but not limited to Iran’s possible withdrawal from the 2015 Nuclear deal, Venezuela’s U.S sanction effects, and the final outcome of the back-and-forth U.S-China trade talks. Iran says its nuclear compliance is contingent on 1.5 mb/d oil exports, which U.S hopes to cut down to zero. Iran told EU diplomats that it needs to export as much as 1.5 mb/d in order for it to stay in the 2015 nuclear deal, while the U.S warns “there will be consequences” should Iran resume nuclear activities. On the trade talks, U.S and China have imposed over 260 billion worth of tariffs on each other’s goods and services as the outcome of talks remains unpredictable. In the midst of these developments, the oil market, to the surprise of Analysts, saw average Brent Crude fall marginally from $72.1 per barrel $71.38 per barrel representing a percentage drop of 0.94%. On the contrary, Standard and Poor’s Global Platts benchmark for finished product showed both Gasoline and Gasoil prices went up marginally by 1.24% and 0.09% respectively. Gasoline closed trading at $718.189 per metric ton, from its previous price of $709.42 per metric ton. Gasoil also saw a slight increment from $636.39 per metric ton to $636.97 per metric ton.

Local Forex

IES data collected and analyzed indicates the Cedi appreciated against the Dollar ($) within the window under review. The dollar currently trades at GHS5.15 as against GHS5.21 in the previous window implying a 1.15% appreciation. This will be about the third consecutive window of strength for the local currency against the U.S Dollar.

IES PROJECTIONS FOR MAY 2019 SECOND PRICING-WINDOW

Fuel prices at the pump for May 2019 second Pricing-window is not expected to change due largely to the nearly consistent strength the local currency has shown thus far. The Cedi’s appreciation against the U.S Dollar could render the marginal increment in prices of finished products on the international market negligible to be passed on to the final consumer. Whereas Gasoline went up 1.24% and Gasoil shot up 0.09%, the market could play out favourably for consumers because of the gain of 1.15% the Cedi recorded against the U.S Dollar. It is important to note that while IES anticipates prices to remain unchanged due to the above, it is possible for some OMCs to reduce their prices in order to maintain or expand their market share in line with market realities as Frimps Oil did in the last window.