Market Outlook – 16th to 30th September, 2024 Pricing Window

Crude Oil and Refined Products Market Review and Outlook

• Crude oil prices on the global market declined to their lowest since the beginning of the year. The fall in prices reflects weak macroeconomic fundamentals, lackluster demand and increasing crude oil production. The Energy Information Administration (EIA) and OPEC have downgraded their expectations for global oil demand growth in their latest reports, citing weak Chinese demand.
• According to the International Energy Agency (IEA), the chief driver of the price reductions is a rapidly slowing Chinese economy, where consumption contracted y-o-y for a fourth straight month in July, by 280 kb/d. Average annual gains of 900 kb/d in 2024, compared to 2.1 mb/d last year, will take demand to almost 103 mb/d. Moreover, gasoline use in the world’s largest oil consumer (the United States) declined y-o-y in five out of the first six months of this year.

• Petrol, diesel, and LPG fell by 10.62%, 6.09%, and 2.40%, respectively. Crude oil fell from about USDto USD76.53/bbl. This represents a year-on-year decline of 28.18%, 29.01%, and 4.71% for petrol, diesel, and LPG, respectively. On a year-to-date basis, petrol, diesel, and LPG declined by 7.60%, 14.48%, and 4.52%, respectively.
• The depreciating Cedi is anticipated to negate the potential transfer of the benefits of the reduced crude prices to petroleum consumers in Ghana. Petrol and diesel prices are expected to decline slightly at the pumps in the 16^th to 30^th September pricing window.

FuFeX30 and Spot Rates

The Fufex30^[1] for the second selling window of September (16^th to 30^th September 2024) is estimated at GHS15.9500/USD, while the applicable spot rate for cash sales is GHS15.9000/USD based on quotations received from oil financing commercial banks.

The BoG’s bi-weekly FX auction to BIDECs in the 16^th to 30^th September 2024 pricing window for the purchase of petroleum products was US$20 million, representing 31% of BIDECs’ bid. The FX rate at which the BoG auctioned to BIDECs rose from GHS10.5151 in January to GHS15.6062 per USD in August, representing a depreciation of 48.96% year-to-date. The sharp depreciation of the cedi is robbing consumers of the benefits of the global decline in crude and petroleum product prices.

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

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 30^th September 2024

Taxes, Levies, and Regulatory Margins

Total taxes, levies, and regulatory margins within the 1^st to 15^th September 2024 selling window accounted for 22.9%, 22.3%, and 13.0% of the ex-pump prices of petrol, diesel, and LPG, respectively.

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

• Pump prices of petroleum products continue to range above GHS14/Ltr since March 2024, largely due to the depreciation of the cedi against the USD. Pump price of LPG rose to its highest since November 2022 to about GHS16/kg. The rise in the price of LPG has been due to the increase in global demand and the depreciation of the Cedi. In the window under consideration, some LPGMCs sold LPG per kilogramme at GHS16.20. The continual increase in the LPG prices at the pumps will most likely defeat the government policy to increase national LPG penetration to about 50% by 2030.
• Petrol and Diesel prices have declined slightly for four consecutive windows, mainly as a result of the decline in global prices. Although on a year-to-date basis petrol prices rose by 5.4% and diesel prices declined by 8.0% on the global market, pump prices of petrol and diesel are up by 16.8% and 12.9%, respectively. The pump prices of LPG have risen by about 57.5% since October 2023.

• The Ghanaian cedi has depreciated by an average of over GHS2.0000 against the USD since January 2024. This has greatly impacted the price of petroleum products at the pumps. The BOG auction rate to BIDECs has depreciated by over 40% since January 2024.

• Pump prices of petrol have increased by over 50% since March 2022 and by over GHS2/Ltr on average since January 2024. Petrol pump prices, which averaged GHS9.3390/Ltr in 2022, are currently being quoted at about GHS14.3500/Ltr by some OMCs. This surge is largely attributed to the sharp depreciation of the Cedi.

• Pump prices for diesel have also risen significantly since February 2023. Presently, diesel is being sold at an average rate of GHS14.3060/Ltr, compared to GHS12.7450/Ltr and GHS10.2740/Ltr in 2023 and 2022,

• However, due to the decline in the price of petrol and diesel in the global market, pump prices of petrol, diesel, and LPG are expected to reduce in the 16^th to 30^th September 2024 pricing window. This expected reduction is likely to be offset by the depreciation of the cedi against the USD.