Folks as we speak, crude oil prices are falling even more. West Texas Crude is US45.89 per barrel whereas Brent is trading at US46.59. WTI and Brent are only 70 US cents apart.
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Here is a chart and some analysis from an oil expert :
The following is from an analyst (about the chart above) :
Brent Crude’s downtrend is consistent. Declines of approximately $10 at a time have been punctuated by short shallow rallies before the drop resumes. Each of these distributions have occurred in the region of a significant round number i.e. $80, $70, $60 and $50. With such a consistent trend it will be easy to identify when the supply dominated environment changes. A rally of more than $5 would be a clear indication, while a higher reaction low would signal demand returning at progressively higher levels.
Considering what we know of the oil market, unconventional oil and gas is more expensive to produce than conventional oil and gas. This is in line with how we define a secular bull in terms of a step up in the marginal cost of production. At today’s levels some producers will be under pressure but the decline is likely to overshoot(markets always tend to overshoot in both directions) because there is a significant lag between when prices and fall and the subsequent impact on production.
It is right to think now about what a bottoming phase will look like, but we do not yet have evidence of its existence.
"but we do not yet have evidence of its existence" !!! That is scary. They cannot see the bottom.
Considering what we know of the oil market, unconventional oil and gas is more expensive to produce than conventional oil and gas. This is in line with how we define a secular bull in terms of a step up in the marginal cost of production. At today’s levels some producers will be under pressure but the decline is likely to overshoot(markets always tend to overshoot in both directions) because there is a significant lag between when prices and fall and the subsequent impact on production.
It is right to think now about what a bottoming phase will look like, but we do not yet have evidence of its existence.
"but we do not yet have evidence of its existence" !!! That is scary. They cannot see the bottom.
Here is another chart. This chart shows the predicted change in GDP for various countries from the falling crude oil prices.
Malaysia may suffer negative GDP of about 0.5% because of falling oil prices. The Philippines may enjoy a growth spurt of almost 2% (!!) from the cheaper fuel costs. China, Thailand and Hong Kong will see extra growth of 1%.
Conclusion : When is TNB going to cut the electricity tariffs? Jangan tipu manusia ok?
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