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| • EXCH RATES |
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Baht/$ 33.68/71
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GOLD |
14,900
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The recent move in West Texas Intermediate (WTI) prices proved that the bullish run in energy markets is not over yet. Geopolitical concerns intensified, particularly in the Middle East where Iran's missile tests last week were seen as posing a heightened threat to Israel and the United States.
The tests, including long-range missiles, confirmed Iran's capability of shutting down the Strait of Hormuz if attacked.
In Nigeria, the Movement of the Emancipation of the Niger Delta (MEND) called off its ceasefire in response to Britain's offer to help deal with unrest in the delta. In Brazil, 80% of the country's production of 1.8 million barrels per day was under threat as oil workers planned a five-day strike starting today. Meanwhile, crude oil stocks in the United States now look increasingly worrisome at levels below 300 million barrels. This could be the case for another bullish run in oil prices in the coming weeks.
Along with fresh investment money, constraints on crude production and limited spare capacity from Opec members will continue to support the entire energy market over the short term. Last week's price correction of $10 a barrel in a matter of days was easily wiped out by daily market news. It is believed that oil prices will remain high with a lot more room to go up unless consumers seriously cut back consumption and conserve energy.
Driven by declining crude values and bearish fundamentals, Singapore gasoline prices fell sharply last week. Demand in Asia appeared to taper off with Indonesia keeping August imports unchanged due to higher domestic gasoline outputs. Financial problems in Vietnam have forced the country to minimise its imports into August. Moreover, China is expected to cut August imports by half because higher production from its domestic refineries has raised stocks to a comfortable level. Hence, softer demand with ample supply in the region will be the main factors pressuring down the gasoline market in Asia in the short term.
Diesel prices in Singapore eased last week on the back of lower crude prices and healthy supply. Cooling Asian demand for diesel also weighed on prices. Australia was seen to be buying less as the country's diesel supply returned to normal levels after the shortage caused by a gas plant outage had eased. Indonesia and China have also covered most of their diesel requirements for July, and may reduce imports next month.
At the same time, regional supply is on the increase this month after refineries in South Korea, Taiwan, and Japan returned from planned maintenance shutdowns. However, the bullish diesel market in the West, due to tight supply amid strong European and African demand, will lend support to diesel prices in Asia this week.
Prepared by Thai Oil Plc
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