Cheaper petrol in the pipeline for motorists
Two weeks after being warned of Easter long weekend price rises, Australian petrol prices are set to dive by more than 9¢ a litre based on the latest Singaporean refinery numbers.
Singaporean prices plunged in Australian dollar terms, reflecting a slump in international oil prices, regional refinery stocks and our currency's strength.
The main international benchmark, Brent crude, closed at an eight-month low on Friday night and America's West Texas Intermediate crude dipped below $US92 a barrel at one stage, with traders talking about a price in the $80s possible in coming weeks.
But Australian petrol prices are more closely correlated to Singapore's Tapis crude - and much more closely correlated to Singapore's MOPS95 petrol benchmark, which plunged spectacularly last week.
Figures supplied by the Australian Institute of Petroleum show MOPS95 fell from about $119 a barrel a week ago to nearly $111.
AIP figures show the national average retail petrol price last week was $1.44 a litre. If the Singaporean prices take their typical one to two weeks to flow through to local bowsers and prices remain down, the average price should be about $1.35 in a fortnight.
Lower petrol prices have a marked affect on consumers' disposable income and, potentially, consumer confidence and retail sales.
The broader issue of international oil prices can be argued as favouring both bears and bulls. The bears point to soft oil prices as an indicator of a weak economy, while bulls see the glass half full - cheaper oil means more spending money for motorists and lower fuel bills for industry.
Present prices do not simply match changes in economic sentiment, but are affected by other factors. For example, US crude stockpiles have been steadily building as more oil comes on stream from new sources - never mind the bigger issue of the impact of extremely cheap gas.
The European recession reduces demand for fuel, but China continues to grow strongly and has replaced the US as the world's biggest importer of oil.
European gas and oil futures markets are in backwardation - future months are trading more cheaply than the spot month - which bodes well for the hip pockets of Australian motorists.
Commodity prices in general are saying plenty about how markets are ignoring North Korea's posturing.
While gold recovered slightly on Friday night from a 21-month low in US dollar terms, that was on the back of weak US employment figures, not international tension.