PTT: Oil to average $70 per barrel in H2

ENERGY

The oil conglomerate PTT has increased its average oil price projection for the second half of this year to US$70 per barrel, driven by higher consumption from India and China and a weaker US dollar, says Buranin Rattanasombat, strategic retail marketing department division manager.

The refined-oil price should stay between $75 and $80 per barrel. At that level, retail oil prices would be priced around 29-32 baht per litre for petrol and gasohol, with 27-30 baht per litre for diesel.

The projection does not include tax, the state Oil Fund or energy conservation fund levies, collections of which increase retail prices by 40%, up from 25% last year, Mr Buranin said.

The sales margin per litre this year will average 1.35 baht per litre, a slight drop from last year's 1.36 baht.

Global oil prices this year are likely to stay below $100 a barrel as the world economy will take a while to get back on track.

"Political chaos in Iran, North Korea's nuclear testing and violence in Nigeria involving its rich oil resources might have changed crude's price in the past, but today the oil industry moves along with global economy," said Mr Buranin.

Even the peak driving season should not affect world demand, considering the US unemployment rate of 9.4%.

Although oil should inch higher in the second half, the refinery sector hasn't recovered yet, given a spread margin between crude and refined oil, which is forecast to be $5, just half the average margin of last year.

Oil prices in 2010 should hit $90 per barrel if the global economic slump bottoms out in the latter half of this year, he said.

July's ethanol reference price rose slightly to 20.70 baht per litre from 20.10 baht due to the rising price of molasses. But PTT said the actual market price should top 22 baht per litre.

Songkiert Tansamrit, PTT's executive vice-president of its research and technology institute, said ethanol production in Thailand could compete with fossil fuels if refined-oil prices stay at more than $50 a barrel.

"Thai ethanol is quite cost-competitive, but if we compare ourselves to Brazil, they beat us with a cost as low as $40 per barrel of refined oil," Mr Buranin added.

PTT shares closed yesterday on the SET at 227 baht, down two baht, in trade worth 1.1 billion baht.

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