Omantribune
Oman Tribune
Omantribune
Omantribune Search News
Web Oman
    Google Search Button
      Tribune
- Oman
- Soccer World Cup
- Other Top Stories
- Middle East
- Business
- Sports
- India
- Pakistan
- Asia
- Europe
- Americas
- Columnists
- Editorial
- Oman Mirror
- Special Features
- Cinema
- PDF Pages
- Weather
- Travel
- Currency Rate
- Hospitals
- Pharmacies
- Services
- Flight Timings
- Museum Timings
Omantribune Home Omantribune About Us Omantribune Advertising Information Omantribune Archives Omantribune Subscribe-Form Omantribune Jobs Omantribune Contact Us
Thursday, March 05, 2015  

Goldman sees ‘new oil order’ on rising US demand
LONDON The oil market is on the cusp of a new cycle, Goldman Sachs said on Friday, with demand in the US growing at a faster pace than in emerging economies such as China and India for the first time in a decade.

That’s likely to have profound implications for how oil markets operate, Jeffrey Currie, Goldman’s influential chief commodity analyst wrote in a note, which says there will be a “new oil order”.

Currie was one of the first oil analysts to predict that crude prices would surge last decade, driven by growing Chinese demand and tightening supplies. Now as US shale production drives down prices for American consumers, the market may shift, he says.

“As oil demand leadership transitions to developed markets from emerging markets, this not only represents a significant fundamental shift, but combined with significant developed market-led production, this turns the previous commodity cycle upside down,” Currie said.

The immediate impact may be subtle at first - Goldman is maintaining its price forecasts for next year for both North Sea Brent crude and US benchmark West Texas Intermediate at $106 and $98, respectively.

In the long run, Currie expects three inter-related developments to flip the market on its head. First, he writes, the boom in US shale oil output should keep oil prices in the US low and lead to a “substantial acceleration” in its economic activity.

Second, stronger US growth will lead the Federal Reserve to scale back its monetary support, which is likely to strengthen the dollar. That should put pressure on emerging market demand by making oil and other commodities priced in the greenback more expensive for users of other currencies.

Third, weaker oil demand growth in countries, including China and India, should help keep markets well supplied, limiting inflation in developed countries.

“This new emerging commodity cycle is the exact opposite of the ‘super cycle’ where weak US economic growth, exacerbated by a lack of domestic energy supplies and conflicts in key commodity-producing regions, helped facilitate more accommodative monetary policy,” Currie said.

“US policy reinforced emerging market demand growth and a weaker US dollar, which largely offset the higher oil and commodity prices to emerging market countries,” in the last decade.

Ultimately, the reversed trend will lead emerging market economies to “shift from being consumers to producers”, Currie said forcing countries such as China to follow the US path in tapping unconventional resources.

Since hitting a record of almost 21 million barrels per day (bpd) in 2005, US oil demand has fallen by more than 10 per cent to 18.5 million bpd last year, data from the US Energy Information shows.

But in September, US demand was up by 1 million bpd on the same month in 2012 - the biggest year-on-year leap since 2001 - while Chinese demand growth has been muted in the second half of this year.

Currie estimates total Chinese demand growth at just 230,000 bpd throughout 2013. Growth was as low as 70,000 bpd in October year-on-year.

US demand has been boosted in part by the fact that gasoline prices are 15 per cent lower in Chicago than in Singapore, Currie said. Retail prices in
the US were at the lowest level in three years at the end of November, the EIA said.

Reuters
NEWS UPDATES
Oman
Sultanate to take part in Expo Milan 2015
Oman Air attends ITB Berlin
Duqm staff housing project on schedule
Board awards tenders worth 10.39m rials
Other Top Stories
China mulls law to regulate NGOs over security
Five killed in Al Qaeda attack on Houthis
Militia snipers slow Iraqi advance
Snowden wants to return home
Obama brushes off Netanyahu speech as ‘nothing new’
India
AAP rebellion quelled for now, Bhushan, Yadav out of panel
PMO launches public contest for mobile app
Spectrum bids elicit Rs600b on Day One
Setback for Nambi as cops get respite in Isro case
‘No CBI probe’ into solar scam
Voter exposes election bribery
Hindu prayer at Idaho Senate opening angers lawmakers
Broadcast of Nirbhaya convict interview banned, BBC defiant
Lower House passes Coal, Insurance bill
Court rejects Chavan plea to drop name in Adarsh case
2G court poses 400 queries to Raja, Kanimozhi
Censor board blocks ‘Fifty Shades of Grey’
After 20 years, Re1 note to make a comeback
Pakistan
KP becomes most resistant state to polio campaigns
Top lawyer shot dead in Karachi
Key suspect in Baldia arson case goes missing
Court warns Sharif of contempt over delay in holding local poll
Pakistani in Canada denies ‘military mission’ links
Give up obsession with Kashmir: Haqqani
Middle East
Demanding Iran’s capitulation no way to secure N-deal: Kerry
US defence budget cuts likely to hurt Israeli missile programme
Erdogan backs extremism, says Assad
S. Arabia, S. Korea sign pact on N-power
Lebanon clears entry for 20 Assyrians
UK bans Israel’s misleading tourism ad
Asia
MILF breakaway group kills 2 troops in market
Terror law not to hit tech firms: China
China to raise defence budget by 10pc to build subs, stealth jets
Desertions, casualties hit Afghan troop strength
Malaysia top Muslim tourist destination
Business
Sultanate likely to step up sukuk, debt issuance
Apple dethrones Samsung in smartphone sales in Q4
S. Arabia sees oil market stabilising, raises prices
Iraq in talks to issue $6b bonds
Sensex crosses 30,000 mark after RBI rate cut
Circle Oil abandons Shisr-1 well
RBI surprises with 25bps rate cut
Sensex scales new record high on rate cut
Banks hint at lowering lending rates
India services growth hits 8-month high
India coal imports jump 31% as demand rises
Optimism drives Geneva Motor Show
FCA could sell more than 10% of Ferrari in IPO
Apple, car battery maker in talks to settle poaching lawsuit
Europe
West ‘needs to act tough’ on Ukraine truce violations
UKIP leader pledges to bring migration levels to normality
Hollande to be first French president to visit Cuba
Rights body slams France for violating treaty on smacking kids
Dozens of drones sighted over Paris
UK real estate ‘safe haven’ for stolen wealth
Sports
Villa out of relegation zone with win
Immobile stars for Dortmund
Dhoni not a firm believer of planning
McCullum fit to play Afghanistan
England ‘not playing with fear’
Kohli in verbal bust-up with wrong reporter
England likely to lose Ballance in search of equilibrium
Pakistan back on track with a bang
Waqar calls for return of cricket to Pakistan
Zimbabwe’s Chigumbura to miss Ireland match
Steyn is match-winner: De Villiers
Ireland vow to bounce back
BCCI want Cameron voted out, says Webster
From Bradford to Napier, for love of cricket and Pakistan
Aussies crush Afghans with milestone win

Sports


International

© 2013 Oman Tribune. All rights reserved. Best viewed in 800 X 600 resolution