(CNA file photo)
Taipei, April 21 (CNA) Domestic gasoline and diesel prices are likely to drop next week as the global oil market has encountered downward pressure amid renewed concerns over a supply glut, market sources said Friday.
A spike in oil production in the United States has raised concerns over an oversupply, sending international crude oil prices lower, which is expected to prompt state-owned CPC Corp. Taiwan (中油) to cut NT$0.4 (US$0.013) per liter for gasoline and NT$0.5 per liter for diesel next week.
The price cut will stop a three-week rising streak after a hike of NT$0.4 per liter for both gasoline and diesel this week.
CPC is scheduled to announce its prices for next week at noon on Sunday and put them into effect at midnight.
If CPC adjusts its fuel prices for the coming week as forecast, prices at the pump will fall to NT$21.9 per liter for super diesel, NT$24.3 for 92 octane unleaded gasoline, NT$25.8 for 95 octane unleaded and NT$27.8 for 98 unleaded, the sources said, refusing to be identified.
Although the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers could extend a six-month output cut deal, which became effective in January, market sentiment remained haunted by a supply glut, the sources said.
Such fears were raised after the U.S. Energy Information Administration (EIA) reported earlier this week that U.S. crude oil production rose to 9.25 million barrels per day, up almost 10 percent since mid-2016.
Moreover, the EIA data shows that crude oil inventories in the U.S. market fell by 1 million barrels in the week to April 14, but gasoline stocks were up by 1.5 million barrels during the week, compared with an earlier market expectation of a 1.9 million barrel fall, which made energy traders wary, the sources said.
On Wednesday, crude oil prices tumbled 3.5 percent after the EIA data and remained weak, likely to lead CPC to cut fuel prices for next week.
CPC calculates its weekly fuel prices based on a weighted oil price formula made up of 70 percent Dubai crude and 30 percent Brent crude.
Due to a decline in international crude oil prices, CPC has calculated the average price of crude oil at US$52.74 per barrel as of April 20, down from NT$54.43 per barrel a week earlier, according to its website.
(By Huang Li-yun and Frances Huang)