3.2 Trend of oil price in 2008-2009
(3.2.1) Average Dubai crude oil price in 2008 is expected to be at 95 US dollar per barrel, increase from 68.83 US dollar per barrel, equivalent to increase of 37.1 percent from year 2007. For the first 10 months, The Dubai crude oil was averaged at 103.30 US dollar per barrel increased by 59.4 percent from the same period of last year. On October Dubai crude oil price was averaged at 67.5 US dollar per barrel. Average Dubai crude oil price during November and December will be lower than the average price in October 2008 from 2 main factors: 1) worsen global economic situation and 2) increase in excess production level by OPEC which expected to reach 2.48 million barrels per day in the forth quarter of 2008.
Oil Cosumption
(million barrels per day) Year 2009_f Consumption 2007 2008_f 2009_f Q1 Q2 Q3 Q4 OECD 49.14 47.79 46.93 47.84 45.80 46.47 47.62 U.S. (50 States) 20.68 19.56 19.31 19.43 19.15 19.28 19.36 U.S. Territories 0.32 0.29 0.29 0.30 0.29 0.28 0.30 Canada 2.37 2.35 2.30 2.33 2.23 2.31 2.35 Europe 15.30 15.16 14.85 14.88 14.50 14.89 15.11 Japan 5.01 4.95 4.81 5.38 4.39 4.53 4.96 Other OECD 5.46 5.48 5.37 5.52 5.23 5.19 5.54 Non-OECD 36.67 38.10 39.00 38.23 39.20 39.14 39.42 Former Soviet Union 4.28 4.41 4.45 4.36 4.54 4.47 4.42 Europe 0.79 0.80 0.82 0.88 0.81 0.76 0.82 China 7.58 8.00 8.34 8.07 8.32 8.33 8.64 Other Asia 8.78 8.91 8.88 8.88 8.97 8.69 8.97 Other Non-OECD 15.24 15.97 16.52 16.04 16.56 16.89 16.57 Total World Consumption 85.81 85.89 85.93 86.07 85.00 85.61 87.05 Source : EIA
(3.2.2) In 2009, average crude oil price will remain stable with price level closes to the average price in the forth of 2008. The Energy Information Administration (EIA) forecasted on November 2008 that average crude oil WTI price in 2009 will be 63.50 US dollar per barrel, lower than the expected average price of 2008. However, NESDB expected average crude oil WTI price to be approximately 60-65 US dollar per barrel, lower than average price of 2008 (101.36 USD per barrel). The major factors that lower the average crude oil forecast price to be less than the expected average price of 2008 are as follows:
- World oil demand is expected to remain stable due to the global economic slowdown. According to EIA forecast in November, global oil demand in 2009 will be 85.93 million barrels per day, close to 85.89 million barrels per day in 2008. The oil demand from OECD countries is expected to be 46.93 million barrels per day, declined from 47.79 million barrels per day, as demand in US, Euro Zone and Japan will reduce. Whilst the oil demand of non-member OECD will increase slightly from 38.1 to 39.0 million barrels per day, due to increasing demand in China, Latin America and Middle-East countries.
- World oil production expected to increase. EIA forecasted in 2008 that the global oil production of non OPEC country will decrease by 280,000 barrels per day, as a result of the delay of oil drilling project. However, global oil production expected to increase by 500,000 barrels per day in 2009 owing to increase in oil production from the US, Azerbaijan and Brazil. Nevertheless oil production from OPEC country tends to decrease from the OPECs’ decision to cut production by 1.5 million barrel per day, effective on 1st of November 2008, with further reduction(G) if oil price condition not improving. The excess oil production of OPEC expected to increase from 1.6 million barrels per day in the second quarter of 2008 to approximately 4 million barrels per day in 2009.
- The problem and damage in financial sector and the transaction including derivatives market had inevitable reduce the incentive of speculation in the future oil market and the other markets. Moreover G-20 had a joint agreement on enhancing the regulatory reform for financial and derivatives market, financial transaction of financial institution, securities trust and private banking.
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