Petrom, the leader of the fuel market in Romania, made diesel cheaper again, and it became cheaper than gasoline, just like it happened 11 months ago. The price of diesel fell on Saturday morning by 5 paise per litre.
It is the fourth decrease since April, after Thursday at noon the price of diesel fuel dropped by three paise per liter. Then, on Tuesday, April 23, standard gasoline became cheaper by two paise per liter and standard diesel by 4 paise per litre, and on Saturday, April 20, the price of diesel fell by 6 paise per litre.
The Petrom Vitan station, monitored by Economedia, displays the following prices on Saturday, April 27, 2024: 7.39 lei for a liter of standard gasoline and 7.36 lei per liter for standard diesel.
According to peco-online, at Petrom stations in the capital, the price of a liter of standard gasoline is now between 7.33 lei and 7.40 lei per liter. In the case of standard diesel, prices vary between 7.34 lei and 7.37 lei per liter. Thus, a liter of diesel is three pennies cheaper than a liter of petrol.
This happened almost a year ago, on May 25, 2023, when Petrom raised the price of gasoline by 4 money per liter. As a result, a liter of gasoline then ended up two pennies more expensive than a liter of diesel. The Petrom Vitan station, monitored by Economedia, displayed on May 25, 2023 a price for standard gasoline of 6.47 lei per liter and 6.45 lei/liter for standard diesel. Then fuel prices went up again and diesel became more expensive than petrol again.
Fuel prices have fluctuated a lot in the last two years, with the biggest difference being recorded in October 2022, when diesel was 1.5 lei more expensive per liter. Then, after a series of changes, gasoline and diesel arrived at the end of April 2023 at the same price, whether it was 6.60 lei or 6.61 lei per liter.
Compared to March 2024, writes pico-online, the average price of a liter of gasoline has increased by 3.8%, which means that a full tank (50 liters) costs 13.5 lei more today than a year ago 30 days. In the case of diesel, the average price of a liter increased by 0.1%, which means that a full tank (50 liters) costs 50 pennies more today than 30 days ago.
During this period, Romania ranks 3rd in the European Union among the countries with the cheapest gasoline, after Bulgaria and Malta. In the case of diesel, our country is in 3rd place among the European Union states in terms of the lowest price for this type of fuel, after Bulgaria and Malta.
According to an analysis published by Oil Price earlier this week, the decline in the price of diesel is a global phenomenon, and this reflects the slowdown in the world economy
Last September, Bloomberg reported that refiners around the world were struggling to keep up with diesel demand. This imbalance has sent diesel prices soaring, with the fuel rising 60% in Europe and topping $140 a barrel in the US.
At the time, there were warnings that the recovery of economic activity after the pandemic and the energy crisis in 2022 could lead to a shortage of diesel and rising inflation. But this did not happen. Because since then the price of diesel has fallen, and now the warnings are about weak oil demand.
Reuters’ John Kemp wrote in a recent article that institutional speculators sold their diesel positions as prices began to fall. This decline, in turn, was the result of adjustments in global trade flows after the string of ship attacks carried out by Yemen’s Houthis in the Red Sea.
It took some time for this adjustment to complete, but now it appears to be a fact, and that fact is putting pressure on diesel prices. Diesel production also appears to have picked up, largely allaying concerns about a shortage. However, the same cannot be said for economic activity.
The March reading of the US PMI, a closely watched indicator of growth or decline in the manufacturing sector, disappointed. It stood at 51.9, while forecasts saw it at 52.5. It was also down from February, when the reading was 52.2. Now, anything above 50 is a sign of growth, but it looks like that growth is weakening and that’s being reflected in diesel prices. Related: Saudi Aramco is eyeing a stake in a Chinese petrochemical firm
The situation was very similar in Europe, which was hardly a surprise given the difficulties the EU manufacturing sector is going through due to higher energy costs and what appears to be insufficient support from governments. And that could be why the diesel market is suffering: because economies run predominantly on diesel.
“There is real weakness in the physical market, reflected in the increase in contango in diesel futures,” PVM analyst Tamas Varga told Bloomberg last week.
Another analyst, James Noel-Beswick of Sparta Commodities, told the publication that there are fundamental reasons for the state of the diesel market: weaker demand in key markets combined with an increase in diesel production capacity.
However, it might be a temporary thing. Reuters’ Kemp reported again earlier this month that an alternative PMI reading by the Institute for Supply Management suggested an improvement in activity in March, particularly in the manufacturing sector. Services, on the other hand, recorded weaker activity. It is interesting to note that the service industry includes sectors such as agriculture, transport and construction – all of which are heavy consumers of diesel.
Bloomberg also suggested that the weakness in diesel demand – and prices – could be a temporary event, much like the strained situation in this market last year, which prompted analysts to warn of possible shortages yet since six months ago.
The fact that this tightening has not really materialized is, on the one hand, good news. Higher fuel prices are passed on to consumers, affecting purchasing power and contributing to inflation. But diesel weakness is also a sign of faltering economies, which is not so good news as seen in Europe, where falling diesel demand has accompanied very weak GDP growth that , in key economies such as Germany, turned into a recession. The US economy is growing, according to the latest GDP reports, but that hasn’t been enough to stave off a sense of worry among analysts. This is probably because although there is growth, it is slowing down.
Tags: Diesel cheaper petrol price reduction applied Petrom Saturday
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