The cost of petrol will decrease for the first time in five months, beginning Monday, amid a global oversupply of oil.
The Ministry of Energy announced on its website today that all grades of petrol have decreased by 15 fils a litre for August, with diesel cheaper by 9 fils.
From August, UAE motorists using Super 98 will pay Dh1.73 a litre compared with Dh1.88 in July, a decrease of 7.9 per cent.
Special 95 will retail at Dh1.62 from Dh1.77 a litre.
EPlus 91 will cost motorists Dh1.55 compared to Dh1.70 in July, a drop of 9.6 per cent.
Vehicles running on diesel will be charged 4.8 per cent less as the fuel slides to Dh1.76 from Dh1.85 last month.
The slide corresponds to the decline in oil prices as petrol and diesel are by-products of crude oil. Brent crude futures, the international benchmark, began to rally last month to over US$50 a barrel. Yet this month was a different story with prices dropping by around 14 per cent to $43 as the market returns to reality, according to Edward Bell, a commodities analyst at Emirates NBD.
He said that the talk when Brent prices began to rise was that the oil surplus was going to tighten up quite a bit.
“The market has come back to the awareness that the fundamentals are still not supportive for the kind of rally we saw for most of the second quarter,” Mr Bell said pointing to a new dilemma.
The oil glut has now moved into the products market, where inventories for items such as gasoline are continuing to build. This has led to a decrease in refining as it becomes less economical for operators. “Refiners are less incentivised to process crude with the market that they earn coming down quite a bit over the past couple of months,” he said.
Previously, the market was overstocked with crude oil, but not with product inventory. This transition has moved the market, and the way it responds is with softer prices, Mr Bell said.
One Abu Dhabi resident working in the oil and gas industry said that while low oil prices are hurting his company, at least his wallet was getting help. Suraj Mathew was spending about Dh100 a week on Super 98 to fill up his Toyota Fortuner.
He said that he was happy that prices at the pump would be cheaper next month even though his company was getting battered. “Sales at my company have dropped. It’s half of what it was last year, but it doesn’t change the fact that as a consumer I’m going to spend less from my own pocket,” Mr Mathew said.
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