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World oil prices. Would we pay lower or higher?

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There used to be long queues right after official announcements of new petrol prices. These days, with the weekly adjustments, the number of vehicles queuing up to pump full tank or even top up their tank has lessened tremendously. I have queued just once, when a petrol station was right in front of me and I saw only a few cars queuing. It probably saved me RM2.60 for the top up. Waiting time? 10 minutes. Haha. Want to read about some predictions for oil prices for the past few months? Well, read on.

Quotes and comments about the oil prices? Here are some recent ones worth reading a bit

NEUTRAL – “Every once in awhile the fundamentals kick in — people realize there’s nothing super bullish there to keep driving it higher,” said Ric Navy, senior vice president for energy futures at RJ O’Brien & Associates LLC. (This comment is so true! Speculation is rife currently. Everything is about’ expectations’ or ‘predictions.’)  Full article in foxbusiness.com here: Crude Rally continues on U.S. output, inventory data.   

LOWER – Goldman Sachs now points to a three-month average of $47.50 per barrel for WTI crude, down from its previous estimate of $55.00 a barrel. (This is considered negative for the producers but positive for us, the consumers. 10 sen difference per litre for a 55-litre oil tank is RM5.50 / full tank. Assuming we can drive 10km with 1 litre means when we drive 2,000km per month, it is either an extra RM22 or lesser by RM22)  Full article in cnbc.com here: Goldman Sachs slashes oil price projection amid US shale surge. 

HIGHER – Meanwhile, U.S. producers will also cut back on drilling due to lower cash flow from operations caused by the drop in prices,” Hatfield said. “We believe these two effects [will] cause oil to rally off the lows back toward the $50 area.” (The expectation is similar to me. See my conclusion below. Haha) Full article in marketwatch.com here:  Oil prices sets sights on longest streak of gains in 10 months. 

Using nothing to support my predictions (haha), I think it will be US$50 per barrel by the end of 2017. The price at the pump? Well, here’s an earlier formula by cilisos.my to calculate the price of retail prices for petrol. Either way, I think RM2 per litre is going to be an average that we will get used to for some time. Hopefully no unforeseen circumstances lah. By the way, oil prices up is not a good news but oil prices staying very low is not good either. With economic growth comes demand for more oil and this usually mean prices inch upwards. Without economic growth means demand comes down and if the producers produce the same amount of oil, then the supply will push prices downwards. Happy following. Stop accelerating so much to save some fuel..

written on 30 June 2017

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