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Gas prices drop (?) to less than $6 per gallon in S. Korea

December 8, 2014

(Yonhap)

SEOUL (Yonhap) — South Korean oil refiners have lowered gasoline prices for four consecutive weeks and are set to announce another cut this week to reflect the plunge in crude prices from a global supply glut, the state-run oil company and oil refiners said Monday.

South Korea’s major refiners have slashed the wholesale gas price every week since the second week of November, recording 1,702.9 won (US$1.53) and 1,508.46 won ($1.35) per liter for gasoline and diesel, respectively, as of Dec. 2, according to the Korea National Oil Corporation (KNOC).

One gallon is equal to 3.785411784 liters.

The average retail price last week dipped to the lowest level since October 2010, and it is poised to slip further as the local refiners are set to announce the latest pricing on Tuesday. The state oil company estimates the discount could be between 50 and 60 won per liter.

Officials at the nation’s four refiners acknowledged plans to lower the price to keep pace with falling global crude prices, while declining to comment on the range of the discount, citing policy on trade secrets.

Dubai crude oil fell below $70 per barrel after the Organization of the Petroleum Exporting Countries (OPEC) last week decided not to lower output despite an oversupplied market, pushing down oil prices to below levels seen during the 2008 global financial crisis.

“There is room for cuts in gasoline prices considering the cheaper crude oil prices, which will be reflected in the upcoming price chart following last week’s OPEC meeting,” an official at a Seoul-based refiner said on condition of anonymity.

Market watchers said the latest discount would not immediately drive down retail prices, given the current stockpile and retail margins, but it would encourage gas stations to sell at around 1,500 won per liter. A total of 339 gas stations, about one-third of the country’s retailers, sell fuel at the 1,500 won-level, the KNOC said.

“Dubai crude prices fell because Saudi Arabia cut the price of oil that it sells to the U.S. and Asia, and Iraq reached a deal with the Kurdish authorities on oil exports through Turkey for increased shipments, building downward price pressures for domestic petroleum products,” the KNOC said in a release.

OPEC pumped 30.56 million barrels a day in November, exceeding its official target for a sixth straight month, according to a survey by global energy researcher Platts.