Oil price rally continues on stronger dollar

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One of the petrol stations in Yangon.

Fuel oil prices are steadily rising on global cues and touch a high of K1,600 per litre, according to petrol stations in Yangon Region.
The prices of fuel oil in the domestic market, tracking the Kyat weakening against US dollar, the market’s data indicated.
On 1 January 2022, the prices stood at K1,390 for Octane 92, K1,440 for Octane 95, K1,375 for diesel and K1,385 for premium diesel, whereas the prices inched higher to K1,565 for Octane 92, K1,615 for Octane 95, K1,590 for diesel and K1,600 for premium diesel. There is a price gap of K170-K200 per litre within a month, according to the local fuel oil market.
The fuel oil price is highly correlated with the foreign exchange rate. At present, the exchange rate is pegged at around K2,000 in the local forex market.
Additionally, the domestic oil price is positively related to the global market. Declining inventories and supply disruptions push oil prices higher in the global market, with US$83.99 per barrel for WTI crude and $87.11 for Brent crude at present.
When a dollar was valued at only K1,330 in early February, the fuel oil was estimated at K590 per litre for Octane 92, K610 for Octane 95, K590 for diesel and K605 for premium diesel in early February 2021 in the domestic retail market.
Consequently, in a bid to steer the dollar rally in the local forex market, the Central Bank of Myanmar (CBM) sold $65 million at its auction market rate in January this year.
Additionally, the Ministry of Commerce in coordination with the Myanmar Petroleum Trade Association carried out a scheme to distribute fuel oil at a fairer rate through the government-sponsored petrol station chains starting from 22 September 2021. The total volume of fuel oil that are sold at very cheap rates is equivalent to the amount that the oil importers directly purchased the foreign currency from the CBM.
The CBM has directly sold over $87 million to the fuel oil sector so far.
Normally, Myanmar yearly imports six million tonnes of fuel oil from external markets, the Ministry of Commerce stated. — NN/GNLM

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