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
Wednesday, October 22, 2014  

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
MED2020 conference to discuss advances in medicine, surgery
ISC organises Diwali fair
Visit Richwood Antiques today without appointment
Omani Media Days expo starts in Paris
Researchers to be honoured
Sunaidy checks facilities at Al Madina Logistics
Tanzanian official visits Sohar Estate
Other Top Stories
US may okay more centrifuges in Iran N-talks
Nadella’s pay tops $80m with big stock awards
Syria military response may fuel extremism: UN
Palestine to join world bodies, if UN resoultion fails
French device ‘helps doctors detect Ebola in 15 minutes’
India
Decks cleared for e-auction of coal blocks to firms
Make paid news poll offence, put ceiling on campaign spending: EC
Modi to spend Diwali with flood-hit in Kashmir
Pakistan’s objection derails UN convention on terrorism, says Doval
Kerala seeks legal help in Isro case
Nokia staff want to roll out Amma cell phones
Khattar to take oath as first BJP CM in Haryana
RBI tells banks to partially freeze KYC non-compliant accounts
BJP set to form government in Maharashtra after Diwali
Disclosures on black money ‘will embarrass Congress’
E-companies bring smiles to faces of rail passengers
Agencies keep watch on terror threat: NSA
Pakistan
TTP sacks spokesman for supporting Baghdadi militia
Robbery ‘appals’ Edhi, ex-staffer on suspect list
New airport project in Gwadar gets green signal
Imran vows to end sit-in if Sharif reveals details of assets
Solar radiation measuring station opens in Punjab
Beggars bear brunt of terror crackdown
Middle East
Top cleric’s death leaves gap in Iranian power structure
War-hit Gazans downbeat on promised aid
Sudan ruling party chooses Bashir as poll candidate
Egypt plans cash sops to offset subsidy cut impact
Syrian stones daughter to death in video
Anbar turns militia’s key target
Asia
HK leader offers olive branch to lure protesters
Search resumes for survivors a week after Nepal blizzard
Runaway teen threatens Abbott in terror video
House approves bill granting credit assistance to OFWs
Reforms to be tested as Myanmar poll set for ’15
China to plug ‘gift’ loophole to tackle graft
Business
OOC in talks to buy minority stake in Oxy’s Oman assets
OCCI supports faster economic diversification
Call to focus on EOR, tight gas
India to let private firms in coal mining
Financial Tech to absorb scam-hit NSEL, liabilities
Falling oil lights up India economic outlook
India move to deregulate diesel prices credit positive, says Moody’s
iPhone sales better than expected but iPad volumes slide
China hackers may have attacked iCloud
JLR opens first foreign unit in China
Europe
Moscow, Kiev and EU struggle to end gas price dispute
Total CEO killed in Moscow plane crash
Istanbul varsity a hotbed for rival protests over Baghdadi militia
Turkey boosts hacking probe
‘Abu Hamza aide’ extradited to US is mentally ill
Sports
Mixed feelings over Pistorius sentence
De Villiers leads SA to victory
Blind helps United come off with draw
Rohr resigns as Niger coach after poor show
India’s oldest football club faces cash crunch
End of 2022 is Blatter’s chance to make amends
Scotland scales four shots clear at top
BCCI suspends Windies’ tours
Al Harthy makes Porsche GT3 Cup return
Watson set for summer of cricket after injury layoff
Marsh, O’Keefe to herald new dawn in Aussie cricket
Wozniacki stuns Sharapova in WTA Finals
Americas
US issues tighter rules for Ebola health workers
Canadian who mowed down soldiers has terror links: Police
Californian charged with murder of Saudi student
Rising cyber attacks prompt US to revamp security prosecution team
Court suspends judge over porn scandal
Autistic student bullied at school, on social media

Sports


International

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