Major local oil traders are bracing for a year of low prices and low demand as the coronavirus pandemic closes airports and shuts down borders, while a feud between Saudi Arabia and Russia is causing prices to plummet globally.
State majority-owned Bangchak Corporation reported domestic oil prices from March 3 to Thursday: high-speed diesel declined 4.3 baht per litre to 18.78 baht, while gasohol 91 was down 4.5 baht per litre to 19.68 baht.
The falling prices over the past few weeks were attributed to the widening scope of the pandemic, which has shut down cross-border travel, as well as Saudi Arabia's decision to flood the market with excess oil supply in a dispute with Russia over cutting production.
Bangchak president Chaiwat Kovavisarach said the company is monitoring the global oil market as it aims to cut operation costs this year through its Rocket project.
National oil and gas conglomerate PTT estimates the global average for oil prices this year may range between US$40-50 per barrel due to the pandemic.
Auttapol Rerkpiboon, chief operating officer of PTT's downstream petroleum business group, said demand for oil will continue to shrink in the first half of this year as land and air transport remains in limbo.
"Prices may stay low at $30-40 per barrel for awhile, then adjust to an average range of 40-50% lower per barrel," Mr Auttapol said.
Over a week ago, Saudi Arabia shocked the global market by slashing export prices to punish Russia for not reducing oil production as a measure to help the industry as it staggers from the coronavirus epidemic.
The move drove crude oil prices below $30 a barrel in much of the world, leaving domestic oil producers in Thailand scrambling to respond.
Russia is expected to hold talks with Saudi Arabia in June, where the issue may be resolved.
He said despite declines in the overall global economy, PTT Group will not suspend capital expenditures over the next five years.
The group and another seven core businesses, with shareholders from oil and gas drilling, oil refineries, oil retailers, petrochemical manufacturers, and the power generation and biochemical segments have an investment budget of roughly 900 billion baht from this year to 2024.
On Thursday PTT released a report on global oil prices for this week being at low levels because Saudi Arabia cut its oil trade price offering by $6 per barrel, which made benchmark markets in the EU and US decrease by $7-8 per barrel.
Saudi Arabia plans to increase oil production in March and April to 9.7 million and 12.3 million barrels per day (BPD), respectively.
The International Energy Agency, Energy Information Administration and Opec also estimated global new demand would be below 100 million BPD, while the US' oil reserves will increase by 7.7 million barrels in the next three months to 452 million barrels.
Recent actions by countries to stimulate economies such as cutting interest rates and capital injections may not be enough to increase oil prices as demand will remain low while a greater number of areas become subject to quarantines, said Mr Auttapol.
Crude ICE Brent prices may range from $32-38 per barrel, NYMEX WTI from $28-34 per barrel and Dubai from $31-37 per barrel, he said.
SET-listed PTG Energy (PTG) expects this year's oil trading volume will grow 15-20% from 4.62 billion litres last year.
PTG president Pitak Ratchakitprakarn said oil sales early this year are expected to remain strong despite the pandemic, with a 13% gain the first two months this year, slightly lower than estimates for the whole year of 15-20%.
"Oil prices will be very low during the first half of the year, but so far so good," said Mr Pitak.
"Saudi Arabia and Russia must have talks to stop their dispute on oil production."