Trend of crude oil price
- World crude oil price escalated for the first time after the continuous decline for 4 consecutive quarters. In the fourth quarter of 2009, the average world crude oil price (Dubai, Brent, Oman, and WTI) stood at 75.6 US dollars per barrel, increased by 36.6 percent from the same period of last year. This was supported by the world economic recovery which caused the demand for oil to heighten, simultaneously with the rise in economic activities as well as massive reduction in the world crude oil price as a result of US economic crisis.
In 2009, average world crude oil price (Dubai, Brent, Oman and WTI) was at 61.90 US dollars per Barrel, dropped by 35.8 percent in 2008. This was due to the highest crude oil price in 2008 resulted from oil market speculation, together with decrease in demand for oil as a result of global economic crisis impact. Moreover, the deterioration in the financial sector reduce the oil market speculation. However, the average world crude oil price continually accelerated in 2009, increased from 44.3 US dollars per Barrel in the first quarter to 59.3 US dollars per Barrel in the second quarter ,and to 68.3 and 75.6 US dollars per Barrel in the third and fourth quarters respectively. The upward trend was mainly attributed by the ecovery of major economies including Asia, Europe and America which lead to higher oil demand as a result of more economic activities. In addition, the depreciation of US dollars also stimulated investors to over weight their speculation in commodity markets.
- Domestic retail petrol prices increased from the same period of last year. In the fourth quarter of 2009, domestic retail price of all petroleum products heightened than those of last year. Retail price of gasoline 95 increased by 34.0 percent and 91 also raised by 31.8 percent, simultaneously with the increase in Gasohol 95 (E10), Gasohol 95 (E20), and Gasohol 91 which were 48.6, 46.6 and 50.6 percent respectively. Whilst average price of high speed diesel and bio-diesel (B5) declined by 21.1 percent. However the acceleration in domestic retail petrol price compared to the same period last year was mainly due to low base effect as a result of lower price in last year, together with the impact of reducing excise tax under the “6 measures 6 months economic package”.
For 2009, the average domestic retail oil price of all petroleum products declined when compared to those of last year, except for the price of gasoline 95 which increase by 6.0 percent, while the price of Gasoline 91, Gasohol 95 (E10), Gasohol 95 (E20) and Gasohol 91 fell by 6.3, 4.3, 7.2, and 5.2 percent consecutively. Moreover the average price of high speed (Continue to).../-Trend of crude oil price.. diesel and bio-diesel (B5) declined by 20.8 and 25.3 percent respectively. The declined in domestic retail petrol price resulted from the decrease in world crude oil price. However, the domestic retail petrol price fell at a slower pace than the reduction in crude oil price, which was a result of the uplifting of excise tax in order to promote energy saving in February together with the extension of excise tax ceiling from 5 baht to 10 baht per litre in May.
1.3 Economics Performance in Q4/09
The global economy in 4th quarter of 2009 continued to recover from previous quarter and showed the positive growth rate for the first time in the past 5 quarters.
In Q4, the global economic condition significantly improved both in the financial condition, international trade and real economic activities. For the recovery of the real economic activities, most of the major economies had positive GDP growth rates on yearly basis. The strong global economic recovery was driven by (i) the acceleration of Chinese economic expansion that supports other Asian economies and regional trade to recover; (ii) the recovery of private demand in the US economy; and (iii) inventory liquidation cycle in the major economies such as China, the US and other advanced economies which was the main driving force for the upturn of manufacturing production and trade. However, European economy contracted due to the weak economic activities in industrialized nation while the poor economic fundamental countries were struggle with financial and economic instabilities.
For financial condition, risks in financial system declined substantially as indicated by the decline of key spreads in financial market. For the global trade condition, the import values of NIEs and ASEAN-5 bounced back to their level in 2007 while the imports values of China picked up to higher than its values in 2007 and 2008. Import demand in the US picked up gradually from the beginning of 2009; though it level remained well bellow that of in 2007 and 2008. However, in line with sluggish domestic demand condition, import demand in Eurozone and Japan have yet indicated sign of recovery as their import value remained well bellow than that of in 2007 and 2008 without significant increase from the beginning of 2009.
- The US economy in the fourth quarter of 2009 grew 0.1 percent (YoY) after a four-consecutive-quarter contraction. For the whole year of 2009, the US economy contracted 2.4 percent. The economic revival was led by the inventory adjustment and the recovery of household consumption expenditure. Private consumption increased by 1.1 percent, the first expansion since the third quarter of 2008. However, private investment contracted by 13.8 percent. On a quarterly basis, the US economy continued to recover from the recession as indicated by 1.4 percent GDP expansion with a contribution of 0.8 percent from inventory, 0.4 percent from private consumption and 0.1 from net export. On the production side, key economic indicators in December showed an improvement of production condition. The manufacturing ISM increased to 55.9, the highest level since April 2006 while manufacturing production in December increased for the sixth consecutive month by 0.64 percent (MoM sa.). The improvement of US economic condition was supported by government stimulus measures especially the “Cash for Clunkers Program” and the “First-time home buyer tax rebate”. Besides, the quantitative easing together with the historically low interest rates stimulated private consumption and asset market to recover. Nevertheless, the high and rising unemployment rate from 7.4 percent in December 2008 to 10.0 percent in December 2009, and debt overhang continued to pose risks to the US economic recovery.
- The European economy expanded by 0.1 percent (QoQ)9 in the fourth quarter, slowed down from 0.4 percent in the third quarter. On a yearly basis, the European economy contracted by 2.1 percent which was a fifth consecutive quarter contraction which resulted in 4.0 percent contraction for the whole year of 2009. The economic performance varied across member countries. Supported by the recovery of manufacturing exports, the economy of Germany, UK and France have improved in the second half of 2009, while Portugal, Irelands, Greece and Spain (PIGS) struggled with severe problem of economic instability and other Eastern European countries remained in recession and are at risks of crisis. Nevertheless, the manufacturing PMI index and the Economic Sentiment Index increased from 49.3 and 87.0 in September to 51.6 and 95.0 in December respectively, reflecting the improvement of economic condition in major economies but the employment condition remained unfavorable for economic recovery. In December, unemployment rate picked up to 9.5 percent from 9.1 percent in September, with the continued increase of layoffs in Portugal, Irelands, Greece and Spain.10 In response to fragile economic condition and the problem of economic instability, the European Central Bank (ECB) and the Bank of England kept policy rate unchanged together with quantitative easing measure for the latter.
- Japanese economy: On a yearly basis the Japanese economy contracted by 0.4 percent in the fourth quarter, compared to a contraction of 5.7 and 5.2 percent in the second and the third quarter respectively which resulted in a contraction of 5.0 percent in 2009. On a quarterly basis, the economy expanded by 1.1 percent, indicating a continue recovery from the recession. The improvement of economic activity in the fourth quarter was attributable to the expansion of private consumption of 1.1 percent (yoy) but exports contracted by 5.0 percent, compared to a contraction 22.7 percent in the third quarter. In December, exports showed the first expansion in 15 months by 12.0 percent on a yearly basis, the strongest expansion in 2 years. The exports to China grew by 42.8 percent and exports to Asia grew 31.2 percent. The improvement of exports contributed to the recovery of manufacturing production in line with the pickup of manufacturing PMI index from 52.3 in November to 53.8 in December. In addition, the Tankan Survey in the fourth quarter rose by 9 basis points from the third quarter reflecting improvement in economic condition. However, Japanese economy continued to struggle with the risk of deflation. The consumer price index in December dropped 1.7 percent, the eleventh-consecutive-month decline, while unemployment rate was at 5.1 percent. Given the fragile economic recovery, in particular the risk of deflation, the Japanese government announced the third stimulus package on the 8th of December 2009, which mainly aimed at domestic demand and household income stimulation.
- The Chinese economy: In the forth quarter, the Chinese economy grew by 10.7 percent (yoy), the highest economic growth rate since the fourth quarter of 2007, and resulted in 8.7 percent expansion for the whole year of 2009. The acceleration of economic expansion in the fourth quarter was mainly attributable to the expansion of domestic demand that was driven my government stimulus packages worth 4 trillion RMB (586 billion US dollars) and a massive credit extension of 9.63 trillion RMB. Investment expanded robustly throughout the year although new loan extension dropped from 7.4 trillion RMB in the half of 2009 to 2.2 trillion RMB in the second half. In response to robust domestic demand expansion, manufacturing production recover gradually as seen in the rise of PMI index to over the benchmark level of 50 for 10 consecutive months and nudged up to 56.6 in December. The strong expansion of domestic demand stimulated imports to increase gradually from previous period by 11.0 percent in December.
- The Asian economy picked up appreciably in the fourth quarter with the contribution of Chinese economic expansion. Most of Asian economies showed positive growth rate in the fourth both on yearly and quarterly basis. On a yearly basis, the economy of South Korea, Singapore, Indonesia, the Philippines and Vietnam grew by 6.0, 3.5, 5.4, 1.8 and 5.2 percent respectively. The improvement of economic condition was largely attributable to the recovery of global economic and trade condition, particularly the strong recovery in China that supported the recovery of intraregional trade and other Asian countries. However, exports to developed countries remained subdue. Nonetheless, the contraction in the first half of 2009 resulted in economic contraction of 0.1 percent, 2.1 percent and 2.4 percent in South Korea, Singapore and Malaysia respectively. In contrast, the economy of the Philippines and Indonesia grew by 0.9 and 4.5 percent respectively while the Vietnamese economy expanded at a slower pace by 4.5 percent in 2009, compared to that of 6.3 percent in 2008. In addition, the decline in global demand and weak economic fundamental, especially high inflation and current account deficit, forced the Vietnamese government to devalue its currency by 5 percent and raised interest rate from 6.0 percent to 7.0 on the 25th November 2009.