OCBC Treasury Research Sees Soft Demand, Oversupply For Oil In 2019

KUALA LUMPUR, Jan 29 (Bernama) – OCBC Treasury Research expects soft demand and oversupply to be a recurring theme for oil in 2019, with more bearish pressures to persist in the short term. It noted that the triple threat of the US-China trade tensions, US government shutdown uncertainties and a no-deal Brexit are weighing heavily on the market while the global economic slowdown is also expected to dampen energy demand. “Furthermore, the market has to contend with a slowing global economy as the business cycle enters its late stage,” it said in a research note titled “2019 Oil Outlook – Dwindling Bulls, Emerging Bears” here Tuesday. At present, OCBC Treasury Research sees two main drivers for a big rally, namely further cuts by OPEC+ in the region of one million barrels per day and geopolitical uprisings in the Middle East. “On the back of the present 1.2 million barrels per day reduction, it is not clear how OPEC+ members will react to another massive supply cut. The possibility of geopolitical uprisings in the Middle East remains a remote fat-tail risk,” it added. OCBC Treasury Research expects Iranian oil sanction waivers by the US to be extended to five of the existing eight countries after its expiry in May. “Three countries -- Greece, Italy and Taiwan -- are not expected to have their waivers renewed. This means China, India, South Korea, Japan and Turkey will continue to import Iranian oil. Due to geopolitical priorities, we expect these five countries to remain on the waiver list for an indefinite period of time,” it added. -- BERNAMA