<TABLE id=msgUN cellSpacing=3 cellPadding=0 width="100%" border=0><TBODY><TR><TD id=msgUNsubj vAlign=top>Coffeeshop Chit Chat - Oil drops under US$34 liao !!!</TD><TD id=msgunetc noWrap align=right>
Subscribe </TD></TR></TBODY></TABLE><TABLE class=msgtable cellSpacing=0 cellPadding=0 width="96%"><TBODY><TR><TD class=msg vAlign=top><TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR class=msghead><TD class=msgbfr1 width="1%"> </TD><TD><TABLE cellSpacing=0 cellPadding=0 border=0><TBODY><TR class=msghead><TD class=msgF noWrap align=right width="1%">From: </TD><TD class=msgFname noWrap width="68%">kojakbt22 <NOBR>
</NOBR> </TD><TD class=msgDate noWrap align=right width="30%">Dec-19 7:58 pm </TD></TR><TR class=msghead><TD class=msgT noWrap align=right width="1%" height=20>To: </TD><TD class=msgTname noWrap width="68%">ALL <NOBR></NOBR></TD><TD class=msgNum noWrap align=right> (1 of 7) </TD></TR></TBODY></TABLE></TD></TR><TR><TD class=msgleft width="1%" rowSpan=4> </TD><TD class=wintiny noWrap align=right>4064.1 </TD></TR><TR><TD height=8></TD></TR><TR><TD class=msgtxt><TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR><TD>Oil drops under US$34
</TD></TR><TR><TD><!-- headline one : end --></TD></TR><TR><TD>Further falls expected as crisis continues</TD></TR><TR><TD><!-- Author --></TD></TR><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Jessica Cheam
</TD></TR><TR><TD><!-- show image if available --></TD></TR></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->
A taxi driver refuelling his vehicle in Shanghai, yesterday. As oil prices dropped worldwide, pushed down by a global slowdown and this lower demand, Beijing said yesterday that it will cut domestic fuel prices for the first time in almost two years - by roughly 20 Singapore cents per litre for petrol and 23 cents per litre for diesel - in a bid to stimulate demand. The oil price slump seems to be benefiting the man on the street, but economists warn that current lows will cut investment in renewable energy, and there will be future price shocks as economies recover. -- PHOTO: XINHUA
RECENT moves by oil-producing nations to slash output have failed to put the brakes on diving oil prices which sank to a new 4 1/2-year low of US$33.44 a barrel yesterday.
<TABLE width=200 align=left valign="top"><TBODY><TR><TD class=padr8><!-- Vodcast --><!-- Background Story -->EXPECT PRICE SHOCKS IN FUTURE
"The seeds of another oil rebound are being sown in this downturn. When economics start feeling the trillions of liquidity governments are pumping in, oil will rapidly rise again."
Mr Ng Weng Hoong, editor of energy new portal EnergyAsia.com
RELATED LINKS
<!-- Audio --><!-- Video --><!-- PDF -->
FALLING DEMANDS, LOWER PRICES
<!-- Photo Gallery -->
</TD></TR></TBODY></TABLE>Analysts are not ruling out the prospect of prices as low as US$20 a barrel in the near future, as the deepening global economic crisis exacerbates the slump in oil demand.
This is despite the Organisation of Petroleum Exporting Countries' (Opec) move on Wednesday to cut oil production by 2.2 million barrels per day from next month to try to stem the slide in prices.
Prices have tumbled 75 per cent since a record high of US$147.27 a barrel was set in July, ending six years of consecutive gains.
The International Energy Agency said that the market's preoccupation with falling demand was not likely to end soon as the economic crisis continues to deepen.
Credit Suisse chief economist Joseph Tan told The Straits Times that the dramatic fall in prices was due to 'massive unwinding' by speculators which saw the collapse of prices from the US$150 range down to US$50.
These speculators - whose bets on future prices drove prices to record highs - are fleeing to safer havens such as government bonds.
Weak economic data worldwide have further depressed oil prices, and there is a possibility that prices might stabilise at the US$20 range - a level at which oil was traded at for a long period, he said.
Banks such as Merrill Lynch and JP Morgan expect oil prices to remain suppressed going into next year. If the contraction spreads to China, prices may dip below US$25, said Merrill Lynch. JP Morgan revised its forecast for average crude oil price in 2009 to US$43 a barrel from US$69.
China has since announced it will cut domestic fuel prices for the first time in almost two years - roughly 13 per cent for petrol and 17 per cent for diesel - in a bid to stimulate demand.
Mr Tan feels that Asia may reap benefits from low oil prices as many countries in the region are net energy importers.
Lower costs will free up countries' resources to act on the monetary front, he said.
However, other experts such as editor of energy news portal EnergyAsia.com, Ng Weng Hoong, felt that the benefit is only like a 'short term tax cut'.
Low oil prices will put a halt to investment in oil exploration and renewable energy, he said.
'The seeds of another oil rebound are being sown in this downturn. When economies start feeling the trillions of liquidity governments are pumping in, oil will rapidly rise again.'
It might sound highly unlikely now, but he maintains that oil prices will hit US$200 a barrel in the next five years.
CIMB-GK economist Song Seng Wun said prices will remain volatile for the foreseeable future as the market 'tries to find the equilibrium between supply and demand, which is difficult at this point'.
For the man in the street, however, low oil prices will provide some relief as costs of fuel come down, he said.
Pump prices in Singapore, for example, were slashed earlier this month - the 15th straight cut since July - while electricity tariffs are set to come down next month. 'But in a way, deflation of prices is more worrying than inflation as it's harder to stimulate the economy when consumers are more inclined to postpone purchases,' he said.
[email protected]
</TD></TR></TBODY></TABLE></TD></TR></TBODY></TABLE>
</TD></TR><TR><TD><!-- headline one : end --></TD></TR><TR><TD>Further falls expected as crisis continues</TD></TR><TR><TD><!-- Author --></TD></TR><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Jessica Cheam
</TD></TR><TR><TD><!-- show image if available --></TD></TR></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->
A taxi driver refuelling his vehicle in Shanghai, yesterday. As oil prices dropped worldwide, pushed down by a global slowdown and this lower demand, Beijing said yesterday that it will cut domestic fuel prices for the first time in almost two years - by roughly 20 Singapore cents per litre for petrol and 23 cents per litre for diesel - in a bid to stimulate demand. The oil price slump seems to be benefiting the man on the street, but economists warn that current lows will cut investment in renewable energy, and there will be future price shocks as economies recover. -- PHOTO: XINHUA
RECENT moves by oil-producing nations to slash output have failed to put the brakes on diving oil prices which sank to a new 4 1/2-year low of US$33.44 a barrel yesterday.
<TABLE width=200 align=left valign="top"><TBODY><TR><TD class=padr8><!-- Vodcast --><!-- Background Story -->EXPECT PRICE SHOCKS IN FUTURE
"The seeds of another oil rebound are being sown in this downturn. When economics start feeling the trillions of liquidity governments are pumping in, oil will rapidly rise again."
Mr Ng Weng Hoong, editor of energy new portal EnergyAsia.com
RELATED LINKS
<!-- Audio --><!-- Video --><!-- PDF -->
<!-- Photo Gallery -->
</TD></TR></TBODY></TABLE>Analysts are not ruling out the prospect of prices as low as US$20 a barrel in the near future, as the deepening global economic crisis exacerbates the slump in oil demand.
This is despite the Organisation of Petroleum Exporting Countries' (Opec) move on Wednesday to cut oil production by 2.2 million barrels per day from next month to try to stem the slide in prices.
Prices have tumbled 75 per cent since a record high of US$147.27 a barrel was set in July, ending six years of consecutive gains.
The International Energy Agency said that the market's preoccupation with falling demand was not likely to end soon as the economic crisis continues to deepen.
Credit Suisse chief economist Joseph Tan told The Straits Times that the dramatic fall in prices was due to 'massive unwinding' by speculators which saw the collapse of prices from the US$150 range down to US$50.
These speculators - whose bets on future prices drove prices to record highs - are fleeing to safer havens such as government bonds.
Weak economic data worldwide have further depressed oil prices, and there is a possibility that prices might stabilise at the US$20 range - a level at which oil was traded at for a long period, he said.
Banks such as Merrill Lynch and JP Morgan expect oil prices to remain suppressed going into next year. If the contraction spreads to China, prices may dip below US$25, said Merrill Lynch. JP Morgan revised its forecast for average crude oil price in 2009 to US$43 a barrel from US$69.
China has since announced it will cut domestic fuel prices for the first time in almost two years - roughly 13 per cent for petrol and 17 per cent for diesel - in a bid to stimulate demand.
Mr Tan feels that Asia may reap benefits from low oil prices as many countries in the region are net energy importers.
Lower costs will free up countries' resources to act on the monetary front, he said.
However, other experts such as editor of energy news portal EnergyAsia.com, Ng Weng Hoong, felt that the benefit is only like a 'short term tax cut'.
Low oil prices will put a halt to investment in oil exploration and renewable energy, he said.
'The seeds of another oil rebound are being sown in this downturn. When economies start feeling the trillions of liquidity governments are pumping in, oil will rapidly rise again.'
It might sound highly unlikely now, but he maintains that oil prices will hit US$200 a barrel in the next five years.
CIMB-GK economist Song Seng Wun said prices will remain volatile for the foreseeable future as the market 'tries to find the equilibrium between supply and demand, which is difficult at this point'.
For the man in the street, however, low oil prices will provide some relief as costs of fuel come down, he said.
Pump prices in Singapore, for example, were slashed earlier this month - the 15th straight cut since July - while electricity tariffs are set to come down next month. 'But in a way, deflation of prices is more worrying than inflation as it's harder to stimulate the economy when consumers are more inclined to postpone purchases,' he said.
[email protected]
</TD></TR></TBODY></TABLE></TD></TR></TBODY></TABLE>
