MANILA - The Philippines will lift a three-week long cap on fuel prices on its main island of Luzon on Monday, President Gloria Macapagal Arroyo said, responding to a clamour from oil firms. Subject to compliance to all agreements, we can now lift EO (Executive Order) 839, Arroyo told representatives of oil companies on Friday.

The Philippine leader said there should be no drastic increases in fuel prices with the removal of the cap.

Arroyo on Oct 23 ordered oil firms to maintain pump prices in Luzon at Oct 15 levels to help Filipinos with rebuilding costs after three typhoons destroyed nearly 39 billion pesos ($835 million) in crops and infrastructure and killed 961 people.

Manila imports almost all its fuel needs and the cap has meant oil firms will be operating at a loss because of a run-up in global crude prices, up 77 percent so far this year.

Government officials said on Monday the inventory of refined petroleum products in the country had dropped to between 8 and 13 days consumption from the usual 21 days as imports had slowed and supplies had dwindled at many gasoline stations.

Top Philippine refiner Petron Corp said last month it expected to incur a net loss of 1.5 billion pesos in the fourth quarter, partly because of the price freeze. ($1=46.715 pesos) (Reporting by Manolo Serapio Jr.; Editing by Clarence Fernandez)