Asian Current Oil Prices Bounce Back

The current oil prices bounced back in Asian trade on bargain hunting after sharp declines in New York. However, worries on the global economy will keep on weighing on sentiment, said analysts.

On the NYMEX, the U.S. benchmark for January delivery was 18 cents higher at a crude price per barrel of $86.44 during the morning trading.

Brent for delivery in January also gained 21 cents to its current oil price of $107.24 per barrel.

The crude prices per barrel of the two contracts fell during the previous trading day following the forecast of the European Central Bank that the eurozone will keep on declining in the coming year, and will only recover in 2014.

In its usual quarterly forecasts, the ECB projects the economy of the eurozone to fall by 0.5 percent this year and another 0.3 percent next year, rather than growing 0.5 percent according to their previous estimate.

The debt problem striking the eurozone and the lack of developments on the U.S. budget talks keeps on causing a negative mood for the market, said analysts.

The drop in the growth projections of the ECB negatively affected oil, according to Jason Huges, premium client management head of Singapore’s IG Markets.

Moreover, the Asian Development Bank took an idea from the European Central Bank and also reduced their growth rates for Asia’s developing economies in a move that will not help market sentiment.

The ADB just reduced its 2012 growth projection for Asia’s developing economies, which consist of 45 countries, from 6.1 to 6.0 percent. Also, it made a downward revision to the 2013 growth forecast, from 6.7 to 6.6 percent.

Markets are also closely watching the standoff over Washington’s discussions to prevent the fiscal cliff that is set to start on the 1st of January. If they are not successful, that will possibly lead the economy of the United States into another recession.

By: Chris Termeer

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

Facebook Twitter LinkedIn Google+ YouTube