Oil reserves reduction readied
The Department of Energy Business (DOEB) is expected to reduce oil reserves this week to 4% (15 days of average daily consumption) from 6% (21.5 days) in response to low demand due to the pandemic.
The cabinet approved the drop in oil reserves last month in response to the pandemic.
A source with knowledge of the matter who requested anonymity said oil demand in Thailand dropped nearly 10% in March and more than 10% so far in April.
"There are no signs regular oil demand will resume soon, but the crude oil that has already been purchased and is being delivered to Thailand will have to be used," the source said.
The source said the oil reserve reduction may last a year to help reduce the operation costs of oil refineries and traders, with reserves perhaps rising to 5% (18 days of daily average consumption), but they are unlikely to reach 6%.
According to the source, the huge surplus of crude and refined oil should be depleted soon.
Global oil prices have drastically dropped from the average in 2019 of US$62.5 for Dubai crude oil reference price to $24.
As a result of the significant drop in price, the six oil refineries in Thailand may suffer an estimated loss of over 15 billion baht.
Thai Oil (TOP) reported to the DOEB that a $1 change in the price of crude oil will change the value of its 7-million-barrel oil stock by 200-250 million baht.
TOP is the largest capacity oil refiner in Thailand and a subsidiary of national oil and gas conglomerate PTT.
The retail oil price of gasohol is down 6.5 baht to 17.98 baht per litre from 24.48 baht on March 3.
Biodiesel B10 is down by 4.15 baht to 17.24 baht per litre.
The US Energy Information Administration estimated demand for gasoline in the US in April may decline by 1.3 million barrels per day, the lowest level in 20 years.
The American Petroleum Institute reported inventory levels of US crude oil, gasoline and distillates stock increased to 11.9 million barrels, surpassing oil analysts' estimations of 9.3 million barrels.
TOP also reported oil exporters will attempt to increase the price of oil to offset the huge drop in demand across the world from land and air travel restrictions across the world.
Opec may soon agree with partners to decrease oil production and exports. The organisation is led by Saudi Arabia, which could cut oil production to 9 million barrels per day from 9.8 million at present.
Recently, Energy Minister Sontirat Sontijirawong ordered relevant state agencies to accelerate state budget disbursement for fiscal 2020 to support programmes that will use solar photovoltaic power to pump groundwater during the drought.
The move aims to tackle severe drought by availing the 3-billion-baht Energy Conservation Fund.
Twenty local governments are preparing to request funds for 111 projects, a process that was recently moved online to avoid gatherings to prevent the spread of the virus.