Crude oil prices will remain within the $80-$100 per barrel range for much of this year, underpinned by a favourable global monetary environment and a tightening oil market, Standard Bank said in a research report published on Monday.
|||Crude oil prices will remain within the $80-$100 per barrel range for much of this year, underpinned by a favourable global monetary environment and a tightening oil market, Standard Bank said in a research report published on Monday.
Written by Standard Bank commodities experts James Zhang, Walter de Wet, Marc Ground, Jeremy Stevens and Simon Freemantle, the report forecast that the global monetary environment would continue to favour higher commodity prices in 2011, despite the build-up of inflationary pressures in large economies.
The report comes as the price of Brent crude earlier this month shot through the 28-month record high of $100 due to political uncertainty in North Africa and the Middle East, and amid concerns about the effect of high prices on the global economy.
“While inflationary pressures are building in large economies, such as China, Europe and the UK - mainly due to cost-push factors - real interest rates remain very low. We also believe that the Fed's quantitative easing is an attempt to weaken the dollar against local goods and services - including commodities. After all, that is what creating inflation (or preventing deflation) is all about: devaluing your currency,” it said.
“Fundamentally, the oil market today is very different from that at the beginning of 2008, with high inventories, OPEC spare capacity and refining spare capacity. Nevertheless, oil prices continue to rise, helped by loose monetary policies implemented by many central banks. We expect this to continue into 2011,” Standard Bank said.
The report also forecast that new oil reserves being found in Africa would become crucial to meeting future global demand. These discoveries have been driven partly by China's rising demand. It said that dwindling supply from the traditional oil-producing countries had already seen Africa's new oil sources increase in value, and the continent now held the key to meeting increased future global demand. “Africa, already a major source for oil exports to China, has shown huge potential in oil reserves and future production. According to the report, Chinese demand and African production will play an increasing role in the shaping of global oil markets in the years to come,” Standard Bank said.
The banking group stated that continuing growth in demand from China was expected to drive African oil production. “While China's oil production could remain stagnant, its demand could double to 17-million barrels per day (mbd) by 2030 - largely owing to surging transport-related demand. China's oil imports are forecast to increase from 5-mbd in 2010 to about 7.5-mbd in 2015 and 13-mbd in 2030, with Africa supplying a major portion,” it said.
The research showed that Africa's proven oil reserves had grown since 1989, spiking from 59.1-billion barrels to 127.5-billion barrels, an increase of a 116%.
“Fast-growing emerging markets have been the most ambitious in unlocking these opportunities. Unsurprisingly, China has led the charge into Africa,” said the report. “It is clear that the convergences between China and Africa are meaningful and structurally robust. As it has done since the turn of the century, China will increasingly look to position itself as Africa's premier partner as it seeks to unlock new sources of crude oil,” it concluded. - I-Net Bridge
Source: http://www.iol.co.za/crude-oil-to-remain-at-80-100-pb-1.1029770
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