Crude oil tops $80 on weak US dollar
Bangkok Post: 21 Oct 2009
Crude tops $80 on weak dollar
Anomalous spike seen driven by speculationCrude oil is trading above US$80 a barrel at a one-year high as the dollar weakens against the euro, making commodities more attractive as an alternative investment.
As it is being pushed up by speculation, the oil price will decline soon, energy experts believe, while some are maintaining a forecast for an average of $60 a barrel, said Vichitr Kuladejkhuna, a DBS Vickers Securities analyst.
In his view, the oil price surge comes from speculation and price forecasts should only rise with clear signs of a global demand recovery.
"We will maintain an average price at $60 this year and $75 for next year. The fluctuation of global oil prices now is mainly due to the weakness of the dollar against major currencies. It is not because of fundamental improvements such as the rising of the global economy," said Mr Vichitr.
Crude oil for November delivery climbed by $1.08 yesterday to $80.05 a barrel in electronic trading on the New York Mercantile Exchange before closing at $79.61, the first time the front-month contract has traded above $80 since Oct 14, 2008. Brent crude for December shipment rose 78 cents to $77.77 and Dubai crude rose 71 cents to $75.83.
Surong Bulakul, the new CEO of Thai Oil Plc (TOP), said trading was pushing the oil price too high despite many economic indicators showing a strong recovery.
"At $80 a barrel? That level is still too optimistic and higher than it should be given the current fundamentals of the global economy," he said.
TOP has also kept its forecast of the average price of crude this year at $70 to reflect the local and global economic situation.
Hedge fund speculation is fuelling the oil market in the short term, following speculation in the gold market, said Mr Surong. But he declined to forecast when oil would decline.
TOP has watched the global crude market closely as the situation could cause the company to suffer new inventory losses.
All oil companies posted severe losses last year from the decline in the value of their inventories due to oil price volatility.
Anusorn Sangnimnuan, president of Bangchak Petroleum Plc, said that if oil continued to trade above $80 until the end of this week, domestic retail prices may rise by another 0.60 baht per litre. "Actually, the crude price going above $80 was unexpected. We estimated that the highest this year would be $75 per barrel," he said.
Dr Anusorn believed the price may drop soon, as trading was influenced by overly optimistic economic data from the US government.
Shares of TOP closed yesterday on the SET at 44.25 baht, down 50 satang, in trade worth 374.10 million baht.
www.bangkokpost.com/business/economics/25999/crude-tops-80-on-weak-dollarWriter: YUTHANA PRAIWAN
Search Option
Recent Posts
Todays Birthdays
