BM Reflex: Fuel prices at stations should fall further at the beginning of June

Fuel prices at stations may still fall at the beginning of June, with reductions likely to average 3-6 gr/l, according to a market commentary by BM Reflex analysts.

The low volatility of prices on the wholesale market at the beginning of the week allows the scenario of price cuts at stations to continue. However, in line with the forecast, the scale of price reductions we recorded compared to prices at the end of last week is slightly lower than recently. Unleaded petrol Pb95 and diesel prices at the start of the long weekend averaged 4 grosze per litre, while petrol Pb98 and LPG prices fell by 1 and 3 gr/l respectively. The scale of changes at individual stations varies, just as the price levels of individual fuels remain highly variable.

Average prices in the country therefore dropped to, respectively: for unleaded petrol 95 - PLN 6.54/l (- PLN 0.03/l), unleaded petrol 98 - PLN 7.26/l (PLN 0.01/l), diesel - PLN 6.54/l (PLN 0.04/l) and autogas - PLN 2.75/l (PLN 0.03/l).

For a month, the prices of unleaded petrol Pb95 and diesel dropped by an average of 15-16 gr per litre, and petrol Pb98 and autogas by 5 and 10 gr/l respectively.

Some station networks have introduced promotions for the long weekend period to further reduce fuel bills.

For the beginning of June, we do not anticipate any change in the retail market trend, which means that prices at stations may still fall, with reductions averaging 3-6 gr/l.

Crude oil

Oil prices are correcting the recent wave of price falls ahead of the upcoming OPEC+ meeting. The quotations of the July series of Brent crude oil contracts, after falling in the region of USD 81/bbl, returned to the area of USD 84.5/bbl.

On Sunday 2 June, the OPEC+ online meeting of oil producers. The market does not expect any significant changes to the current OPEC+ supply policy. Production limits are likely to be maintained at their current level in the second half of the year as well.

According to IEA data, since October 2022, the 18 OPEC+ countries (Angola left OPEC+ on 1 January) covered by production limits have reduced production by a total of 3.3 million bbl/d from 37.81 million bbl/d to 34.48 million bbl/d in April this year. The largest production reduction (1.9 million bbl/d) was made by Saudi Arabia. On the other hand, Iranian oil production increased by 0.75 million bbl/d to 3.25 million bbl/d over the same period. Iran is an OPEC+ member, but the country is not bound by production limits. OPEC+ spare capacity in April rose to 5.9 million bbl/d and is close to historic highs.

Summing up the 141st meeting of the OPEC Economic Commission, the OPEC Secretary General referred positively to the economic outlook and forecasts for oil demand growth rates. Global oil demand is expected to increase by 2.2 million bbl/d to 104.5 million bbl/d in 2024 and by 1.8 million bbl/d to 106.3 million bbl/d in 2025. In both 2024 and 2025, global oil and fuel consumption will reach new historic highs.