ICP October 2020 Slightly Increases Amid Decline in World Oil Prices

The Indonesian Crude Price (ICP) in October 2020 edged up by US$0.64 per barrel to US$38.07 per barrel from September’s US$37.43 per barrel. The Indonesian Oil Price Team stated that the reason for the increase in ICP was the margin for light distillate products in the Asia Pacific market had improved. The increase in ICP comes amid a decline in the average price of major crude oil in the international market. As an illustration, the price of West Texas Intermediate (WTI) oil in October fell US$0.07 per barrel to US$39.55 per barrel compared to September's US$39.63 per barrel. The price of Brent oil fell US$0.35 per barrel, from US$41.87 per barrel in September to US$41.52 per barrel in October.

Factors that influenced the decline in major oil prices in the international market included concerns from market players as the increase in COVID-19 cases in several countries, especially in Europe, led to the reintroduction of lockdowns. This dims the prospect of improving oil demand. Moreover, the weakening labor market in the United States increased market concerns about global economic recovery. "The US fiscal stimulus package to revive the economy affected by the pandemic will resume the negotiation process after the US Presidential Election," the Indonesian Oil Price Team said in a written statement on Tuesday (11/10).

For the Asia Pacific region, the decline in oil price is also due to China's high oil stocks after buying the commodity in large quantities last spring, when prices were low. "The decline in the refinery operations in Asia, with the level of operation in Japan down to 70 percent and South Korea down to 60 percent, has also led to a decline in crude oil prices in the Asia Pacific region," the Indonesian Oil Price Team said.