Crude price to decline but volatility stays
Thai Oil expects a decline in the average Dubai crude-oil price next year to US$105 per barrel, thanks to easing supply.
However, the largest Thai refiner reckoned that global economic uncertainties and violence in oil-producing countries could result in volatility.
In 2012, Dubai crude moved between $82 and $125 per barrel, resulting in a $109 average, 3.67 per cent higher than $106 in the previous year. Historically, oil prices have been affected by economic and political tensions, which at present include the euro-zone debt crisis and violence in the Middle East.
The average should ease further to $105 per barrel on higher supply. It is expected that producers both in and outside the Organisation of the Petroleum Exporting Countries (Opec) will supply more oil to the world market, probably exceeding demand.
“Yet volatility is expected to remain all year around because of economic uncertainties, violence in the Middle East and Opec’s dominant role in supply control – to maintain balanced oil prices,” Thai Oil noted.
Oil prices will move mainly according to supply and demand, it said.
Other factors to come into play next year are the low inventories in many countries, political conditions in the Middle East – particularly Syria – and weather conditions. The United States’ decision to limit hedge funds’ derivatives trading under the Dodd-Frank Act would also influence oil prices.
Based on the International Monetary Fund’s forecast for global economic growth of 3.6 per cent for 2013, the International Energy Agency estimates world oil demand at 90.4 million barrels a day, which represents a 0.8-per-cent increase from 2012. Extra demand will come from Asia and the Middle East, while demand in the euro zone will shrink.
Demand in the United States is expected to remain stagnant, Thai Oil said.
Despite sanctions on Iran’s oil trade, global supply will rise because of higher production from other countries, it said. Non-Opec countries’ capacity is expected to increase by 860,000 barrels a day, including 570,000 million from Iraq and the US.
Opec’s capacity will be maintained at 30.2 million barrels a day, it said.
