CONTRIBUTED BY SHAN SAEED
Analysts are predicting that the oil market will be on the upsurge due to the increase in demand but remains cautious for 2018.
Geopolitical risks, demand and supply gap, the freezing weather in various parts of the world including North America, the weakening of the US dollar in 2018 and the reduction of capital expenditure (CAPEX) by energy companies to cope with uncertainties as some of the causes.
Demand for oil will touch 98 million barrels per day (bpd) in 2018. By the third quarter of next year, daily demand for oil will reach 100 million barrels per day (MBPD).
Most of the demand will be driven from China, ASEAN, India and South America. Supply will remain tight as companies are revisiting their CAPEX structure to fathom the energy demand moving forward.
The geopolitical risks pertains to the US dollar which would continue to remain weak in 2018.
Trump wants a weaker dollar to spur economic growth. US dollar will depreciate by 3-5 % in 2018 against all major currencies globally.
The commodity would be traded at the price of between $60 and $87/barrel. This might be the year that Petro Yuan to be introduced in the ASEAN energy market as a way to reduce the dependence on Petrodollars.
China, Saudi Arabia and Russia have already started their petro transactions in Chinese Yuan. Many countries are moving away from Petrodollar and started making payment in Yuan. Keeping in view of the above the variables, I can foresee that crude oil market is heading for consolidation phase and bringing the required CAPEX back.
Based on the analysis on the market which for the last 12 years from 2006-2017, the crude oil prices have never fallen below $37 / barrel. The oil prices touched $147.17 per barrel on July 11, 2008, and on the side, oil prices traded at $22/barrel in Jan 2002 with an average price of $73/barrel within that period.
Shan has 17 years of solid financial market experience in the areas of private banking, risk/compliance management, commodity investments, global economy and business strategy. He commenced his own asset company named Dita Advisory Services with his partners managing $50 million for high valued clients and has engaged with IQI Group Holdings advising corporate clients from Korea / Japan / China / Europe / Middle East.
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