Oil prices rally on Friday as Pakistan decided to slash POL rates

Oil prices rose in early Asian trade on Friday after falling two per cent in the previous session just hours after Pakistan announced a substantial cut in POL rates.

The latest increase in oil prices in international markets comes on the back of central bank interest rate hikes, with expectations that the trend will continue during the day after a series of positive oil demand forecasts. However, a stronger dollar makes oil more expensive for those using other currencies.

Brent crude futures rose 36 cents or 0.4 percent to $81.57 per barrel by 0109 GMT while West Texas Intermediate (WTI) futures rose 25 cents or 0.3 percent to $76.36 per barrel. Both benchmarks are poised to end the week more than 7 percent higher.

The market found support this week from International Energy Agency projections of Chinese oil demand recovering next year after a 2022 contraction to 400,000 barrels per day. The agency raised its 2023 oil demand growth estimate to 1.7 million barrels per day.

The Organisation of Petroleum Exporting Countries (OPEC) on Tuesday had stuck to its forecasts for global oil demand growth of 2.55 million barrels per day this year and 2.25 million barrels per day in 2023 after several downgrades,

It argued that economic slowdown was “quite evident” but there was potential upside such as from a relaxation of China’s zero-Covid policy.

In bearish demand news, the United States Federal Reserve indicated it would raise interest rates further next year, even as the economy slips toward a possible recession.

Earlier, the Bank of England and the European Central Bank on Thursday had raised interest rates to fight inflation.

Pakistan slashes POL prices

Finance Minister Ishaq Dar announced on Thursday the government decision to cut the petrol and diesel prices by Rs10 and Rs7.5 respectively.

In a televised address, he said: “At this moment, the prime minister wants us to pass maximum relief to the public and we have been implementing that since Oct 30.”

“According to our calculations, petrol prices will be reduced by Rs10 to Rs214.8 after midnight. [The price of] high-speed diesel will be decreased by Rs7.5 to Rs227.80,” he said.

Dar said that Kerosene oil would cost Rs171.38 after an Rs10 decrease and the price of light diesel oil will be reduced by Rs10 to Rs169 per litre.

The government had previously kept the prices of all petroleum products unchanged on Oct 15, Oct 30, and Nov 15.

Earlier on Nov 30, the price of kerosene oil was slashed by Rs10 while the price of light diesel oil was reduced by Rs7.5 per litre.

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