Brisbane & Melbourne petrol prices hit record highs

Aussie energy shares outperform

Oil market update; Used car prices

• What happened? Last week, the Brent crude price lifted by US$2.42 a barrel or 3.3 per cent to US$75.34 a barrel. And the US Nymex price added US$2.25 a barrel or 3.2 per cent to US$71.97 a barrel, its fourth straight weekly gain.

• According to data from the Australian Institute of Petroleum, the Brisbane average price of unleaded petrol jumped by 16.7 cents a litre last week to a record high 172.8 cents a litre. And the Melbourne average price of unleaded petrol lifted by 12.0 cents a litre last week to a record high 166.9 cents a litre. The national average retail petrol price rose by 3.2 cents last week to a 35-month high of 157.4 cents per litre.

• Implications: Last week, Aussie energy shares topped the leader board of the S&P/ASX 200 index, lifting 3.4 per cent. Woodside Petroleum shares were the standout, jumping 9.6 per cent over the week, ahead of Santos (up 4.5 per cent). According to OPEC, global crude oil demand is expected to reach 100.8 million barrels per day in 2022, exceeding pre-pandemic levels due to improving vaccination rates, spurring a recovery in international travel. If fuel demand continues to lift, supporting oil prices, this could support the shares of ASX-listed energy companies.

• Other data: Used car prices were broadly flat last week, easing by 0.5 per cent nationwide, according to Datium Insights. Sales volumes fell by 8.9 per cent due to lockdowns with clearance rates 2.4 per cent lower.

Movements in energy prices can affect consumer spending, and in turn, prospects for retailers. Used vehicle price data provides a guide to supply and demand for companies in the auto and components sector.

What does it mean?

• Last week, Aussie energy shares topped the leader board of the S&P/ASX 200 index, lifting 3.4 per cent. Shares of Woodside Petroleum were the standout, jumping 9.6 per cent over the week, ahead of Santos (up 4.5 per cent).

• Why? In its monthly report released last week OPEC said that it expects global crude oil demand to reach 100.8 million barrels per day in 2022, exceeding pre-pandemic levels due to improving vaccination rates, spurring a recovery in international travel. If fuel demand continues to lift, boosting oil prices, this could support the shares of ASX-listed energy companies.

• Despite weaker crude oil prices on Friday, the Brent crude price lifted by US$2.42 a barrel or 3.3 per cent to US$75.34 a barrel last week. And the US Nymex price added US$2.25 a barrel or 3.2 per cent to US$71.97 a barrel, its fourth straight weekly gain. The US Energy Information Administration reported that US crude oil inventories fell by 6.4 million barrels last week to 417.4 million barrels, the lowest since September 2019.

• While demand for crude oil remains strong, supply disruptions are easing in the US oil patch after back-to-back tropical storms reduced output in recent weeks. In fact, Reuters reported that US Gulf Coast crude oil exports are flowing again after hurricanes Nicholas and Ida took out 26 million barrels of offshore production. But production restarts continue with about 28 per cent of Gulf of Mexico crude output still offline. Baker Hughes reported that the oil rig count, an early indicator of future output, rose by nine rigs to 512 last week, its highest level since April 2020.

• And in another sign that OPEC+ supply discipline may be waning, Interfax said that Russia will increase its oil exports by 3 per cent in the December quarter.

• So what does this mean for Aussie motorists? Upward pressure on international crude and imported refined petroleum prices are likely to keep domestic petrol prices elevated. The benchmark Singapore gasoline price rose by US$2.59 or 3.2 per cent to US$84.29 a barrel last week. In Aussie dollar terms, the Singapore gasoline price lifted $4.74 or 4.3 per cent to $115.42 a barrel or 72.59 cents a litre.

• Last week the national average price of unleaded petrol rose by 3.2 cents to a 35-month high of 157.4 cents per litre (c/l), according to the Australian Institute of Petroleum.

• South-East Queensland continues to be gripped by elevated fuel prices. According to data from the Australian Institute of Petroleum, the Brisbane average price of unleaded petrol jumped by 16.7 cents a litre last week to a record high 172.8 cents a litre. Today, unleaded petrol prices are as high as 177.9 cents at Bowen Hills, according to real-time fuel app MotorMouth. With the average retail unleaded petrol price at 169.9 cents a litre across Brisbane today, motorists should top-up rather than fill-up their fuel tanks. Brisbane’s average wholesale (TGP) petrol price stands at 138.2 cents a litre today, around 32 cents a litre below the average retail price, implying a decent profit margin for servos.

• According to data from the Australian Institute of Petroleum, the Melbourne average price of unleaded petrol rose by 12.0 cents a litre last week to a record high 166.9 cents a litre. Today, the average retail unleaded petrol price is 164.2 cents a litre according to MotorMouth, with prices easing from recent daily peaks of 169.9 cents a litre. But some retailers are still selling fuel at 176.0 cents a litre, so drivers should shop around for the best deal with pump prices easing to 150-160 cents a litre in several Melbourne suburbs.

• In Sydney, unleaded fuel prices remain as high as 171.9 cents a litre in some suburbs today, according to MotorMouth. Retailers continue to defend their margins as the ongoing lockdown reduces demand for petrol. Sydney’s average wholesale (TGP) petrol price stands at 138.8 cents a litre today, remaining well below the city’s average retail unleaded petrol price of 155.0 cents a litre, a mark-up of around 16 cents a litre. That said, the retail discounting cycle is now underway, so motorists can expect pump prices to ease later this week with servos in Sydney’s South-West already offering unleaded petrol as low as 135.6 cents a litre.

• Used car prices were broadly flat last week, easing by 0.5 per cent nationwide, according to Datium Insights. Sales volumes plunged 8.9 per cent due to lockdowns with clearance rates 2.4 per cent lower. Demand for second hand Mitsubishi Triton’s (up 3.4 per cent) and Ford Ranger’s (up 3.8 per cent) increased by the most across the top 15 traded used vehicles over the week. But the Toyota HiAce (-3.9 per cent) and Toyota RAV4 (-3.4 per cent) both saw the biggest fall in prices.

What do you need to know?

Weekly oil market update

• Last week, the Brent crude price lifted by US$2.42 a barrel or 3.3 per cent to US$75.34 a barrel. And the US Nymex price added US$2.25 a barrel or 3.2 per cent to US$71.97 a barrel, its fourth straight weekly gain.

• The benchmark Singapore gasoline price rose by US$2.59 or 3.2 per cent to US$84.29 a barrel last week. In Aussie dollar terms, the Singapore gasoline price lifted $4.74 or 4.3 per cent to $115.42 a barrel or 72.59 cents a litre.

• Last week, the national average price of unleaded petrol rose by 3.2 cents to a 35-month high of 157.4 cents per litre (c/l), according to the Australian Institute of Petroleum.

• The national average wholesale (TGP) petrol price rose by 0.4 cents last week to 137.2 cents per litre. Today the TGP price sits at 138.6 cents per litre.

• MotorMouth records the following average retail prices for unleaded fuel in capital cities today: Sydney 155.0c/l; Melbourne 164.2c/l; Brisbane 169.9c/l; Adelaide 143.4c/l; Perth 139.9c/l; Hobart 155.7c/l; Darwin 152.0c/l and Canberra 159.3c/l.

Weekly used vehicle market – September 20

• Datium Insights have reported the following results for the week to September 20:

Used vehicle prices were broadly flat (-0.5 per cent) with finance companies (+8.8 per cent) leading the increases, but councils (-12.6 per cent) fell by the most.

Sales volumes plunged 8.9 per cent due to lockdowns in NSW and Victoria.

Clearance rates fell by 2.4 per cent.

Prices for the top 15 traded vehicles were mostly lower. The Ford Ranger (+3.8 per cent) and Mitsubishi Triton (+3.4 per cent) had the largest price increases, but the Toyota HiAce (-3.9 per cent) and Toyota RAV4 (-3.4 per cent) both saw the biggest fall in prices.

Published by Ryan Felsman, Senior Economist, CommSec