Oil speculation puts pressure on retail prices

 Thirapot Vajrabhaya, chairman of Shell Company of Thailand, said yesterday that the company would monitor the Singapore market for another day before making the decision. However, he said oil prices tend to rise this week.

 "They are highly volatile partly because the US financial bailout package could not win investor confidence and there is expectation of further weakening of US dollar. Funds thus shift investment to the commodity market," he said.

 On Monday, the October crude futures contract on the New York Mercantile Exchange rose $16.37, or 16 per cent, to expire at $120.92 a barrel. It touched $130 in intraday trading.

 Anusorn Sangnimnuan, president of Bangchak Petroleum, said retail prices could be jacked up in the next few days. Coupled additional levies on oil contribution to the Oil Fund which are effective yesterday, the soaring oil price led to negative marketing margin for both petrol and diesel produts.

 Bangchak and PTT would also monitor oil prices for a few more days before making the decision.

"It is difficult to predict the price movements, as it depends on the US's financial rescue," Anusorn said, adding that the crude price for November delivery is now US$109 per barrel.

Thirapot himself did not mind the higher contribution to the Oil Fund, though admitting that it narrows the average marketing margin to 70 satang per litre.

Energy Policy and Planning Office Director-General Viraphol Jirapraditkul said the mandatory contrubutions to the Oil Fund may be reduced to ease retailers' burden. Earlier saying that oil prices could be $80-$90 a barrel in the last quarter, Viraphol said that the recent spike is a result of speculation.

 Energy Permanent Secretary Pornchai Rujiprapha said retailers should wait for 1-2 days before raising pump prices. He said when oil prices receded recently, retailers also gained from extra high marketing margin.