Crude Oil and Refined Products Market Review and Outlook

The downward trajectory of global demand for crude oil and petroleum products reversed since the beginning of 2024 due to the positive signs of global economic recovery. Global economic indices have reversed in a positive trajectory in 2024 after worsening in 2023 due to the impact of the COVID-19 pandemic outbreak as well as the war between Russia and Ukraine. The impact of these events resulted in interest rates surging to alarming rates in both the US and Europe. The hikes in interest rates by central banks to combat the rising inflation resulted in the appreciation of the dollar against major trading currencies. This impacted the expectation of global economic recovery, leading to a lowerthan-expected global demand in 2023. However, the World Bank has projected the global economy will grow by 3.1% in 2024, compared to 2.7% in 2023. Global inflation is also expected to fall to 5.8% in 2024. These positive global economic indicators are the major contributing factors driving the global demand for crude and petroleum products upward.

Crude oil surged by about 1.4% from USD81.3/bbl to USD82.4/bbl in the window under review. This represents a Y-o-Y decline of about 1.0% and a surge of about 5.1% since the first window of December 2023.

The demand for petroleum products has been projected to rise in the first quarter of the year, given the higher-than-expected growth in the US and China. Moreover, Reuters predicts that the US central bank will begin to cut down its interest rate, which will further raise demand for crude and petroleum products.

The international market price of all major petroleum products surged in the window under review. Petrol, diesel, and LPG surged by 1.7%, 6.0%, and 8.8%, respectively. Compared to the same period last year, petrol and LPG prices declined by 7.3% and 13.0% respectively, while diesel rose by 0.2%. On a y-t-d basis, the international market price of petrol, diesel, and LPG surged by 8.0%, 9.3%, and 1.8%, respectively.

FuFeX30 and Spot Rates

The Fufex30^[1] for the first selling window of February (16^th to 29^th February 2024) is estimated at GHS12.7500/USD, while the applicable spot rate for cash sales is GHS12.6000/USD based on quotations received from oil financing commercial banks.

[1] The Fufex30 is a 30-day GHS/USD forward fx rate used as a benchmark rate for BIDECs ex-ref price estimations.

[1] The Fufex30 is a 30-day GHS/USD forward fx rate used as a benchmark rate for BIDECs ex-ref price estimations. 

The BoG’s bi-weekly FX auction to BIDECs in the 1^st to 15^th February 2024 pricing window for the purchase of petroleum products was US$20 million, representing 21% of BIDECs’ bid. The FX rate auctioned by BoG to BIDECs was GHS12.3948/USD, representing a depreciation of 2.08% compared to the previous window. The BOG auction rate from January to December 2023 depreciated by 28%.

The Ex-Refinery Price Indicator (Xpi)

The Ex-ref price indicator (Xpi) is computed using the referenced international market prices usually adopted by BIDECs, factoring in the CBOD economic breakeven benchmark premium for a given window, and converting from USD/mt to GHS/ltr using the Fufex30 for sales on credit and the spot FX rate for sales on cash.

Ex-ref Price Effective 16^th to 29^th February 2024 Price Component               Petrol             Diesel            LPG

Taxes, Levies, and Regulatory Margins

Total taxes, levies, and regulatory margins within the 1^st to 15^th February 2024 selling window accounted for 24.4%, 22.1%, and 15.0% of the ex-pump prices of petrol, diesel, and LPG, respectively.  

OMC Pricing Performance: 1^st to 15^th February 2024

The average pump prices of petroleum products for the 1^st to 15^th February 2024 (the first selling window of the year) surged for all petroleum products consumed in the country. The surged was largely a results of internal price hikes and the depreciation of the Cedi against the USD. The price of petrol and diesel in the international market rose by about 2.9% and 4.8% in the 12^th to 26^th January 2024 selling window. Further to this, the Cedi also depreciated by about 3.0% to the USD. Hence, the surge in the pump prices within the period.

Pump prices of petrol within the period rose by about 2.8% to GHS 12.1680/Ltr. This was mainly due to the depreciation of the cedi against the dollar within the period and the surge in international prices. On a yo-y basis, petrol pump prices declined by about 19.4% and surged by about 1.7% since the beginning of the year.

Similar to the pump price of petrol, diesel prices surged by about 2.4% to an average of GHS13.1160/ltr in the 1^st to 15^th February 2024. On a year-on-year basis, pump prices for diesel declined by about 14.3%.

Pump prices of petrol and diesel are expected to rise in the coming window due to the weakening of the Cedi against the US Dollar and the surge in international market prices.