Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks, Bitcoin, Gold and Silver Markets Brief - 18th Feb 25
Harnessing Market Insights to Drive Financial Success - 18th Feb 25
Stock Market Bubble 2025 - 11th Feb 25
Fed Interest Rate Cut Probability - 11th Feb 25
Global Liquidity Prepares to Fire Bull Market Booster Rockets - 11th Feb 25
Stock Market Sentiment Speaks: A Long-Term Bear Market Is Simply Impossible Today - 11th Feb 25
A Stock Market Chart That’s Out of This World - 11th Feb 25
These Are The Banks The Fed Believes Will Fail - 11th Feb 25
S&P 500: Dangerous Fragility Near Record High - 11th Feb 25
Stocks, Bitcoin and Crypto Markets Get High on Donald Trump Pump - 10th Feb 25
Bitcoin Break Out, MSTR Rocket to the Moon! AI Tech Stocks Earnings Season - 10th Feb 25
Liquidity and Inflation - 10th Feb 25
Gold Stocks Valuation Anomaly - 10th Feb 25
Stocks, Bitcoin and Crypto's Under President Donald Pump - 8th Feb 25
Transition to a New Global Monetary System - 8th Feb 25
Betting On Outliers: Yuri Milner and the Art of the Power Law - 8th Feb 25
President Black Swan Slithers into the Year of the Snake, Chaos Rules! - 2nd Feb 25
Trump's Squid Game America, a Year of Black Swans and Bull Market Pumps - 24th Jan 25
Japan Interest Rate Hike - Black Swan Panic Event Incoming? - 23rd Jan 25
It's Five Nights at Freddy's Again! - 12th Jan 25
Squid Game Stock Market 2025 - 5th Jan 25

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Crude Oil Prices 2012, Another Roller Coaster Ride?

Commodities / Crude Oil Jan 18, 2012 - 02:51 AM GMT

By: Asha_Bangalore

Commodities

Oil is trading around $112 a barrel this morning. Putting things in perspective, the price of oil today is higher than the level seen in the 2005-2006 period when the world economy was growing at a faster pace and the economic challenges of 2012 were not on the horizon.


There are several factors that will influence the price of oil in 2012. First, geopolitical risks such as the Iran controversy and vulnerabilities in the Middle East could lift oil prices and bear adversely on global economic stability. Second, Saudi Arabia’s aspiration to let crude oil trade at current levels to help fund its expenses arising from the generosity extended to its citizens after the financial crisis suggests that oil prices could hover at upwards of $100; this price is higher than the previous de-facto price of $75. Third, China’s growth path is another important determinant of oil prices in 2012. Real GDP of China grew 8.9% from a year ago in the fourth quarter (see Chart 2). Although it came in slightly higher than market expectations, the fact remains it is a weak performance. China’s GDP is projected to grow around 8.0%-8.5% in 2012. Large variations of this estimate will have a corresponding impact on oil prices.

Fourth, the European debt crisis and its impact of economic growth of the region is another significant factor that will influence oil prices in 2012. It is nearly certain that Europe will experience a recession in 2012. The reduction in imports of Europe as a result of the downswing in economic activity should translate to setbacks in economic growth among its trading partners such as China and the United States, which in turn will affect demand for oil. The net impact of these four factors on the supply and demand of oil is uncertain, but price volatility in 2012 is nearly certain.

Asha Bangalore — Senior Vice President and Economist

http://www.northerntrust.com

Asha Bangalore is Vice President and Economist at The Northern Trust Company, Chicago. Prior to joining the bank in 1994, she was Consultant to savings and loan institutions and commercial banks at Financial & Economic Strategies Corporation, Chicago.

Copyright © 2012 Asha Bangalore

The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in