Friday, June 15, 2012

Oil prices have fallen below its psychological levels (OCBC)

Oil prices have fallen below its psychological levels, notably with Brent and WTI fading below $100/bbl and $85/bbl respectively. Given the shift in focus from geopolitical concerns between Iran and the Western powers to the deepening Eurozone banking concerns, the fall in prices from their 2012 high is not surprising. However, key fundamentals have radically evolved over the span of three months, which ultimately convinced us that crude oil prices are set to decline further to late 2010 levels by end year.

The key driver for bearish oil prices going forward remains very much driven by the same reason which brought about inflated oil prices in early 2012: easing of geopolitical tensions between Iran and the Western powers. With the Iranian oil talks next week, the knowledge that high oil prices may potentially derail what is left of global growth while a cash-strapped Iran is eager to unwind the potential embargo placed on them starting July may persuade global powers (and Iran) to finally concede for a mutual win-win situation.

The easing of concerns over a negative Iranian supply shock has thus naturally led the market towards a more bleak picture of global economic fundamentals especially market concerns about a potential Greek exit (or commonly known as a Grexit) and the recent spotlight on Spain. The euphoria from a EUR100bn Spanish bailout agreement faded in a matter of hours, with Spanish 10-year bond yields surging to record high since 1997 suggest the gravity of risk aversion sentiments in the markets. In this light, we continue to observe bearish signals illustrated in falling equities, slowing OECD leading indicator and declining US gasoline demand over the past 2-3 months (see appendix). Thus, crude oil, as a growth-dependent commodity, will likely see a sustained fall in prices should global sentiment worsen.

Our crude oil demand/supply and econometric models point towards a sustained decline in oil prices. Firstly, the dynamics between demand and supply is startling, with the global economic slowdown to drag oil demand further while oil supply is expected to stay high due to fears of higher oil prices. According to IEA, oil demand is expected to rise by 1.3mbpd while supply is to grow 1.6mbpd in 2012. More importantly, the amount of global production of crude oil has lately overtaken global demand, according to the Energy Intelligence Group, thus providing another piece to the puzzle as to how prices will trend going forward. Our econometric model which attempts to create an oil fitted line likewise suggests that current oil prices are still inflated and points a sustained downward trend.

With the shift in focus from the negative Iran oil supply shock to the deepening Eurozone debt concerns and global growth slowdown for 2012, it is likely that Brent prices continue to see lower levels. In addition, note the record high oil inventories in the US, coupled with the global crude supply surplus at latest observation. The caveat being should the Iranian talks on 18 – 19 June fail, it may prompt the EU to initiate the embargo against Iranian oil imports on July 1. Also, any further accommodation by the Fed at its next FOMC meeting may allow for a knee-jerk risk-on reaction to the market, which could lead to a short-term rise in oil prices. Barring these wildcards, our base case scenario depicts a slowing global economy scenario and we look for Brent prices to touch $90/bbl at year end.




Source/Extract/Excerpts/来源/转贴/摘录: OCBC Research
Publish date:14/06/12

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Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)
“错过时机”胜于“搞错对象”:不会全军覆没!”
做自己熟悉的事,等到发现大好机会才投钱下去

乔治·索罗斯(George Soros)

“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

李驰(中国巴菲特)
高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
冷眼(冯时能)投资概念
“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
曹仁超-香港股神/港股明灯
1.有智慧,不如趁势
2.止损不止盈
成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
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每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
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