Author Topic: Is oil on the rebound?  (Read 2049 times)

Offline Oly Shyte

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Is oil on the rebound?
« on: March 02, 2015, 07:15:19 PM »
WHEN the price of oil, which has been depressed for some time, spiked up momentarily to US$60 per barrel, many people wondered what the medium term outlook would be. Expectations ranged from low to slightly bullish.

“We are looking at crude oil price averaging US$50-55 per barrel this year (2015 year-to-date: US$52 per barrel) and US$65-US$70 per barrel in the next two years.

“We expect the excess supply situation to ease gradually amid modest global economic growth, so we are not looking at a sharp rebound back to US$100 per barrel anytime soon,’’ said Suhaimi Ilias, chief economist, Maybank Investment Bank.

“Global oil prices should hover between US$60 and US$80 per barrel over the next two years, based on readings of oil demand and supply dynamics, the shale revolution, Canadian oil sands and sustained Opec supplies.

“These stack up against the lower energy intensity of global growth and a slower growth trajectory compared to the pre-global financial crisis period. The wild cards are geopolitics and fears that a cold war may be coming,’’ said Julia Goh, director/regional economist, CIMB Investment Bank.

“As for gasoline prices paid at the pump, assuming that global oil prices stay below US$80 per barrel, my best guess is that RON 95 prices could be capped at below RM2.30 per litre,’’ said Goh.

“While Brent crude oil price has increased in February to around US$58 per barrel, up from the January average of US$50 per barrel, we think that volatility in oil price should likely continue and the uptrend is not sustainable.

“Currently, the short-term trading of crude oil is influenced by news flow of oil and gas sector developments in the US and also in the Opec area.

“However, the state of the global oil and gas market has not changed much since the fall in crude oil prices.

“Crude oil inventories are still likely to remain high this year while it will take a longer time to see a decrease in global crude oil supply,’’ said Manokaran Mottain, chief economist, Alliance Bank.

The fundamentals of the global oil market have changed with the advancement of new shale oil extraction technology.

“For now, supply-side factors will be the key driver to crude oil prices – primarily, capital expenditure allocation in global oil and gas companies and actions from the Opec.

“Uptake in global demand would also be a welcome boost to stabilise crude oil prices.

‘’In the longer-run, we expect the new-normal crude oil price to average below the previous years of US$110 per barrel - at around US$80 per barrel,’’ added Manokaran.

“We have revised our crude oil price assumptions to US$72.50 per barrel (from US$79.75) for 2015 and US$80 per barrel (from US$95 per barrel) for 2016 onwards.

“We expect stronger crude oil prices in the second half of the year, as the oversupply of oil is expected to improve by then,’’ said Alexander Chia, head of Malaysia research, RHB Research Institute.

Opec expects a surplus of 1.13 million barrels per day in 2015, with 1.83mil barrels per day of surplus supply in the first half of the year. Therefore, for the second half, it is expected at 430,000 barrels per day.

“I do not expect oil prices to remain at the current level for more than six to nine months.

“They are likely to rebound although they may not reach the levels during their heydays a few years back.

“If history is any guide, oil prices have never remained below two standard deviations (SD) from their mean for more than six to nine months (based on data since the early 1990s).

“They have reverted to at least one SD below their mean within two to three quarters.

“Currently, they are below two SDs of their mean. Fundamentally speaking, although supply (especially from the US) seems to suggest that prices will remain depressed for quite a while, expectations of a slowdown in production will likely emerge by middle of the year, sparking concerns about the possible pick-up in prices again.

“Such expectations will cause oil prices to rebound to possibly around US$65-US$75 per barrel, in my view,’’ said Nor Zahidi Alias, associate director of economic research and chief economist at Malaysian Rating Corp.

“On the demand side, I foresee the soft landing of China’s economy as part of the reasons why people will become less pessimistic about the future for oil demand.

“Cruising with a real growth rate of around 7%-7.5% (for China), this will not likely cause a further significant drop in global oil demand,’’ added Nor Zahidi.

It looks like it is going to be quite a long period of adjustment to lower oil prices.

That should give enough lead time for businesses that use oil as a major component in their raw materials to make arrangements for the proper pricing of their products and services. There will also be new economic realities to be dealt with in the next two to three years as our economy looks for more diversified sources of income.

Columnist Yap Leng Kuen looks forward to cheaper fuel prices and hence, more disposable income in the next few years.

 8)
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Online king

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Re: Is oil on the rebound?
« Reply #1 on: March 02, 2015, 07:44:30 PM »

DEAD
CAT
BOUNCE
??  ??  ??

Offline Eric yk

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Re: Is oil on the rebound?
« Reply #2 on: March 02, 2015, 08:06:48 PM »
DEAD
CAT
BOUNCE
??  ??  ??
Bouce? all of them above comment the price will remain low for long time le??

Offline Oly Shyte

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Re: Is oil on the rebound?
« Reply #3 on: March 03, 2015, 10:10:53 AM »
 8)
Disclaimer: Every "I EAT" thread created were totally owned by Oly Shyte based on personal observation. It does not represent any stock promotion, buy, hold or sell call and most importantly gathering followers. Please make your own decision wisely! - OLY Securities Research

Offline eye-hub

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Re: Is oil on the rebound?
« Reply #4 on: March 07, 2015, 09:16:13 AM »
Why?

Oil like drama movie lah....

We can only see show...


Ppl act and control....


8)
"Price is the most important factor to use in relation to value."  - Walter Schloss

Online king

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Re: Is oil on the rebound?
« Reply #5 on: March 07, 2015, 12:51:34 PM »
Why?

Oil like drama movie lah....

We can only see show...


Ppl act and control....



Show time.

HaHa.