Oil will continue to fluctuate in 2009: CAPA
Friday, January 09, 2009：Oil’s volatility in these economically unstable times are assured, with the year ahead likely to see the prices go up and down, says the Centre for Asia Pacific Aviation (CAPA) in its latest report.
CAPA predicts that oil will likely rise up to US$60 a barrel on tightening supply over the next few months, then if global economies remain weak, for the price to drop down below US$40 once again.
“The price of oil has recently approached decade lows, following negative economic sentiment and slackening demand... The rapidity of its decline and the recent stabilisation suggest a greater probability of increases in price, rather than substantial reductions or even stability in the short term,” says CAPA.
“Factors that will push the price up include political uncertainty, for example in the Middle East; OPEC volume reductions, as many national producers seek a level around USD70-80; fluctuations in the US dollar; and, probably, speculation.”
The analysts also suggest that those consumers who had previously cut back on fuel due to the high price, will once again begin consumption, which will in turn drive up demand and prices.
For the meantime, CAPA predicts that in 2009 underlying supply will be the major contributing factor to prices.