THE trend of falling jet fuel prices is expected to continue early next year, the Energy department said, triggering a lowering of the jet fuel surcharge.
In an advisory on Thursday, the Civil Aeronautics Board (CAB) said it is further lowering the surcharge for domestic and international flights in January.
Rino E. Abad, director of the Oil Industry Management Bureau at the Department of Energy (DoE) said fuel prices will likely continue their decline in the first quarter.
“For next year, actually, there is an oversupply globally. Based on the global Platts projection, the oversupply will run until the end of 2024. Lower oil prices will be maintained, including jet fuel,” Mr. Abad told BusinessWorld on Thursday.
The CAB downgraded the fuel surcharge to Level 6 for Jan. 1-31 from Level 7 in December. At Level 6, the domestic passenger surcharge is between P185 and P665, while the international surcharge is between P610.37 and P4,538.40.
For December, the domestic passenger surcharge was between P219 and P739, while the international surcharge was between P722.71 and P5,373.69.
A fuel surcharge may be collected by airlines based on the movements in jet fuel prices, based on a benchmark known as MOPS (Mean of Platts Singapore).
“Airlines wishing to impose or collect fuel surcharges for the same period must file their applications with this Office on or before the effectivity period, with fuel surcharge rates not to exceed the above-stated level,” CAB said in the advisory.
The CAB added that the applicable conversion rate for October is P56.60 to the dollar.
This week, the retail price of gasoline remained unchanged, while diesel rose 10 centavos while kerosene declined 85 centavos. These price adjustments resulted in a year-to-date net increase of P11 per liter for gasoline, P3.95 for diesel and a net decrease of 30 centavos for kerosene.
The week-on-week price of Dubai crude has fallen by about $2.00 per barrel, while MOPS gasoline, diesel and kerosene have also decreased by about $0.90, $1.20, and $2.80 per barrel, respectively, according to the Energy department.
However, despite the oversupply conditions, Mr. Abad warned of a looming output cut by the Organization of the Petroleum Exporting Countries and their allies including Russia (OPEC+), which will tighten supply conditions.
“Now the only threat we are seeing is a possible additional cut by OPEC+ by 900,000 barrels which could drive oil prices up,” Mr. Abad said, adding that if this cut materializes, about 2.2 million barrels will be taken off the market.
This month, OPEC+ oil producers said they intend to cut output early next year in response to surpluses.
In April, OPEC+ announced further output target cuts of around 1.16 million barrels per day from May through the rest of 2023.
“If OPEC+ delivered on this oil output cut, this will overturn any oversupply,” he added. — Ashley Erika O. Jose