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BUNKER INDEX :: Price Index, News and Directory Information for the Marine Fuel Industry
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Oil outlook forecasts rising prices in 2010

Report says prices will increase with recovering fundamentals and a decline in OPEC’s spare capacity.

Updated on 29 Jan 2010 13:11 GMT

Danish risk management specialist A/S Global Risk Management Ltd. has released its oil outlook report for 2010, where the company forecasts an increase in oil prices in the coming year.

Entitled "The Oil Market - 2010 Outlook", the report says "Oil prices will increase in the coming year. Basic fundamentals are currently recovering from their weakest state and with recovering fundamentals we will see increasing oil prices."

The key points of the report are as follows:

* Short term rebalancing in the oil market where oil will be unloaded from the floating storages and refineries will be shut down to balance supply and demand.

* OPEC will increase production but capacity will remain unchanged due to lack of investments.

* Fiscal policies will be tightened due to governments running out of cash. Consumers and central banks will take over from there. This will create inflation in the near future. This trend is already evident by the speculators who seek protection in the oil and commodity markets.

Short-term Global Risk Forecast

Over the next months, we will see increasing prices but the upside will be limited. The oil market will become more balanced with respect to demand and supply and inventories will return to more normal levels by mid-2010. Currently a lot of distillates are on floating storage, but increasing tanker rates will push this inventory ashore. In the short term this will lower refinery margins even more than now. The refineries will counter the falling margins with refinery shutdowns and closures.

Medium-term Global Risk forecast

In second half of 2010 the higher prices will lead to higher oil supply from OPEC countries. Capacity will not increase accordingly leading to a decline in OPEC’s spare capacity. This will make oil prices increase further.

With the lower supply of products from refineries and the lower OPEC spare capacity, the foundation for a continued uptrend is in place. The massive fiscal packages from governments will slow, but the consumers will take over and increase consumption as their economic situation improves leading to higher demand for oil products.

The lower stimuli from governments will be counterbalanced by central banks continuing their low interest rates and money-printing policies. This will make investors seek protection against inflation through the purchase of oil products and commodities.

To order a copy of the report, please fill in the following registration form on the Global Risk Management website by clicking on the URL address below, or contact them via the telephone number/email address below.


Telephone: +45 88 38 00 00
Email: hedging@global-riskmanagement.com

Related Links:

Gold an 'early warning' of higher oil prices
Praxis Market Update
Countdown to London-Antwerp Global Risk seminars
A/S Global Risk Management Ltd.

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