"The marketing fee is now Bt1.80 per litre on average," Vithaya Wangchitrarak, PTT executive vice president, said yesterday.

Following the price cut, the price of octane-91 petrol is below Bt25, at Bt24.79 per litre, and diesel is Bt22.54. The price cut follows a sharp fall in global oil prices.

Yesterday Dubai crude oil stood at US$50.20 (Bt1,800) per barrel. The price of finished petrol is $59.40 while finished diesel stands at $65.73.

Vithaya expects that oil prices this year will be less volatile due to the slowing global economy, particularly in the US, as well as the higher-than-usual temperatures in the Northern Hemisphere. He also believes that Opec's plan to cut output by 500,000 barrels per day will not have much effect on oil prices.

"The market does not believe that output will be cut, mainly because of the weak dollar, which will adversely affect petrodollars for the member countries."

Moreover, Opec would find it difficult to control supplies from member countries, as each would seek to maintain their present incomes.

"It's kind of a psychological campaign," Vithaya said "Unrest in the Middle East - Iran, Iraq - or Nigeria would not have much effect in the way of geopolitical problems," said Manoon Siriwan, an oil expert who was formerly a senior executive vice president at Bangchak Petroleum.

Manoon noted that if Opec eventually did cut production, oil prices might edge up slightly but not much, as some members would continue to produce above their quota while non-Opec countries would still be pumping oil.

He expects that, globally, oil demand should stand at between 85-86 million barrels per day, from 84 million barrels last year, due mainly to economic growth in Southeast Asia and India. As the US and European economies slow down, there is a tendency that supply could exceed demand.

Meanwhile, fewer hedge funds have been involved in the oil-futures market, as most unloaded their contracts ahead of the oil-price decline and have shifted their investments to other markets. "Thus, global oil prices should be less volatile than last year and prices will be subject to supply and demand," Vithaya said.

PTT has forecast that domestic demand for gasohol would be maintained at 3.5 million litres per day. PTT's market share for gasohol 95 would be around 40 million litres per month. The company plans to focus on the promotion of gasohol 91, which is a bigger market and consumers in this group should be easily convinced to change from octane-91 petrol to gasohol 91, because of the pricing structure.