Thursday, November 20, 2008

Petrol And Diesel Below MR1.50 A Litre ?

Hantu Laut

In my post 'Where Crude Oil Heading For' I predicted the price of crude would fall below US$50 per barrel.The likelihood of it going below that level look more and more realistic now.The huge stockpile in the US helped to drive price down.OPEC's production cut have not helped to stabilise price.The cut of 2 million barrel a day since September had no effect on keeping price sliding further down. The group are calling for further cuts.

India and China would require less need for energy as their economies begin to slow down in the next few months.Japan, one of the largest economy in the world is in a recession.The US,Europe ( the largest in the world) and most other countries are already in a recession.Only Malaysia and most third world countries are not ?

The current US crude price stand at US$53.90.The London Brent closed nearer the $50 mark at US$51.84 a barrel.Unusually cheaper than WTI ( West Texas Intermediate) which used to get around $1.00 to $2.00 higher than Brent.WTI is sweeter than Brent with lower sulphur content hence the higher price.

In 1998 the average price for crude was about US$12.00 a barrel and 4 years ago the average price was about US$38.00 a barrel.The price peaked at $147 few months back not so much due to supply and demand but more due to speculations by nasty speculators.

Middle East producers which have lower production costs may be able to sustain such low prices but new oilfields and those in deep waters may lose money due to higher production costs.

Those in Petronas may not be the happiest people now if they don't have huge forward contracts. If they didn't have any than production cut should be an option to cut down losses.

Malaysian motorists should be happy soon if the government continued to pass on the cheaper price.If price falls below US$50 a barrel than the price of petrol and diesel can posssibly be adjusted to as low as RM1.50 a litre.

fuel-price-chart

Before 1990 the price of petrol was RM0.89 a litre.The drastic increase was this year when crude price shot up to as high as US$ 147 a barrel.At least for the next few months Malaysians should be happy with cheaper fuel and falling prices of other consumer goods.

Farmers must be the dumbest people. At least in Sabah they are.The prices of green had gone up about two weeks ago when most other items are falling.

The price of crude may pick up again during the 1st or 2nd Quarter of next year if the global economy do not slide further down and those greedy hedge funds stopped screwing the world's financial markets again.

6 comments:

kittykat46 said...

The price of petrol, in this country at least, is unlikely to drop below the RM 2.00 now.
The government is desperately short of cash. The guy who gave me the low down last week was possibly breaking the OSA, but its not a pretty picture from the inside.

So, the government actually needs motorists to subsidise its funds.

Just think about it. Every time you visit the petrol station, you will be doing your patriotic duty subsidising Dotty's Christmas shopping in the US.

Legion™ said...

Mark my words, prices of Crude Oil will never go below USD$ 55. Simply because the Saudis planned their annual budget using USD$ 55 as the base crude oil price for their revenue stream.

Legion™ said...

Apparently, crude oil prices are now below USD$55... Now we shall see for how long the Saudis are willing to make losses.

Hantu Laut said...

kittykat46,
Can't rule that out but the probability of it going below RM2.00 is quite likely if the crude goes below $50 a barrel.

Just watch,the KLCI will slide below 800 anytime in the next 3 weeks.

Jed Yoong said...

makes u wonder if pak lah tried to help the opp and anwar win the election...

Anonymous said...

Farmers must be the dumbest people. At least in Sabah they are.The prices of green had gone up about two weeks ago when most other items are falling....

I disagree with you here, don't blame the farmers, blame the middleman. You should take weather conditions in the equation.


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