A sharp drop in global crude oil prices has not eased the cost of living in the Philippines, where a weak peso and sticky retail fuel margins keep consumer inflation elevated.
WTI crude slid to $72 a barrel, down 12% from its April peak, as the article notes the decline in global benchmarks. The move reflects demand weakness, particularly from China, and increased OPEC+ output. The bearish trend is set to persist unless supply cuts are announced.
Technicals for WTI show support at $70, with resistance at $75. A break below $70 would open the door to $65. Sustained above $75 would neutralize the bearish bias.
Demand expectations have been downgraded due to weaker Chinese industrial activity and ample global inventories. The seasonal bump in gasoline consumption has been insufficient to absorb the supply overhang.
The decline in crude often weighs on other energy products like heating oil and natural gas, but the article focuses on the disconnect between crude prices and Philippine retail fuel costs.
Crude oil benchmarks declined to three-month lows in June, pressured by a soft global demand outlook and rising supply from OPEC+. Despite the slide, Philippine households are yet to see lower pump prices. A depreciating peso, which has lost 4% against the dollar this quarter, offsets the crude decline, keeping import costs high. Logistics bottlenecks and delayed retail price adjustments further impede the passthrough, leaving inflation above the central bank’s target.
The Philippine peso has depreciated against the U.S. dollar, making imported oil more expensive in local currency terms. Logistical bottlenecks and delayed price adjustments at retail stations also keep pump prices high.
The slide is attributed to slowing global demand, particularly from China, and increased supply from major producers. These factors have pushed crude to multi-month lows.
While lower oil prices typically reduce import bills and ease inflation, the currency weakness offsets these gains. The net effect on the current account and growth is limited until the peso recovers.