ID :
182908
Wed, 05/18/2011 - 13:56
Auther :
Shortlink :
https://oananews.org//node/182908
The shortlink copeid
HIGH OIL PRICE THREATENS GLOBAL ECONOMIC GROWTH PROJECTIONS
SINGAPORE (Bernama) - Ernst & Young’s quarterly global Oil & Gas
forecast released Wednesday, highlighted that, despite the fact that short-term
oil and gas supply and demand remains relatively balanced, oil prices have gone
up in anticipation of supply shocks.
This is against a background of unrest in North Africa and the Middle East,
coupled with the disaster in Japan.
As a result, global economic growth projections are being reduced and are
dropping to around four per cent for 2011, the report said.
Dale Nijoka, Global Oil & Gas Leader for Ernst & Young, said there was a new
kind of "oil shock" factor unlike the past oil shocks which were caused by
embargoes, war or demand growth.
The new pricing shock is being driven by broader geopolitical factors across
a larger geographic area, he said.
"More simply put, markets are proactively reacting to a potential supply
problem, not necessarily real-time fundamentals," he said when commenting on the
report.
According to the report, for most of 2010, crude oil prices (West Texas
Intermediate, (WTI)) hovered in the US$70 to US$80 per barrel range.
But as the global economy grew, global oil demand recovered and prices
began to move higher in the last quarter of 2010.
The WTI price broke through the US$100/barrel mark in early March 2011, as
Libyan supplies were cut off.
In terms of gas, a combination of factors has created a more positive
outlook for natural gas.
The crisis at Japan's Fukushima Daiichi nuclear power plant and the loss of
Libyan gas supply have established a "floor" for global gas prices.
In the short-term, additional Liquefied Natural Gas will be needed to
replace the damaged nuclear generation, but the nuclear power generation risks
brought to light in Japan could also renew a push for greater long-term use of
natural gas for electricity generation, it said.
Nijoka said that although the global economic growth remained robust, it was
being challenged by political unrest and the natural disaster in Japan, making
the outcomes unpredictable.
He said the markets had reacted quickly by pushing oil prices higher.
But the higher prices are expected to weaken the global economic recovery and
restrain oil demand growth.
forecast released Wednesday, highlighted that, despite the fact that short-term
oil and gas supply and demand remains relatively balanced, oil prices have gone
up in anticipation of supply shocks.
This is against a background of unrest in North Africa and the Middle East,
coupled with the disaster in Japan.
As a result, global economic growth projections are being reduced and are
dropping to around four per cent for 2011, the report said.
Dale Nijoka, Global Oil & Gas Leader for Ernst & Young, said there was a new
kind of "oil shock" factor unlike the past oil shocks which were caused by
embargoes, war or demand growth.
The new pricing shock is being driven by broader geopolitical factors across
a larger geographic area, he said.
"More simply put, markets are proactively reacting to a potential supply
problem, not necessarily real-time fundamentals," he said when commenting on the
report.
According to the report, for most of 2010, crude oil prices (West Texas
Intermediate, (WTI)) hovered in the US$70 to US$80 per barrel range.
But as the global economy grew, global oil demand recovered and prices
began to move higher in the last quarter of 2010.
The WTI price broke through the US$100/barrel mark in early March 2011, as
Libyan supplies were cut off.
In terms of gas, a combination of factors has created a more positive
outlook for natural gas.
The crisis at Japan's Fukushima Daiichi nuclear power plant and the loss of
Libyan gas supply have established a "floor" for global gas prices.
In the short-term, additional Liquefied Natural Gas will be needed to
replace the damaged nuclear generation, but the nuclear power generation risks
brought to light in Japan could also renew a push for greater long-term use of
natural gas for electricity generation, it said.
Nijoka said that although the global economic growth remained robust, it was
being challenged by political unrest and the natural disaster in Japan, making
the outcomes unpredictable.
He said the markets had reacted quickly by pushing oil prices higher.
But the higher prices are expected to weaken the global economic recovery and
restrain oil demand growth.
