13 October 2010 13:02 [Source: ICIS news]
SINGAPORE (ICIS)--Speculation has pushed crude and other commodity prices above fundamental values and has had a positive impact on the global economy following the 2008 global economic crisis, the CEO of SOCAR Trading said on Wednesday.
The rise in crude and other commodity prices, which resulted principally from the speculation of banks, is likely to prevent a double-dip recession, SOCAR Trading’s Valeriy Golovushkin said.
Golovushkin, who was speaking at the Asia-Pacific Petroleum Conference (APPEC) in ?xml:namespace>
The high commodity prices had cushioned resource-rich developing countries, including
Since the crisis, he added, regulated economies such as
Golovushkin said that fundamentals would indicate that the price of crude should be around $30/bbl.
However, he said, activity in paper markets had helped push prices far above that level, with trading volumes on the NYMEX and ICE exchanges in 2010 estimated to be worth $25,000bn, compared with just $2,000bn for physical oil.
To support his claim regarding weak fundamentals for oil, Golovushkin said that although crude prices had risen, OPEC spare capacity still stood at around 6m bbl/day.
“Spare capacity should remain at 3m-5m bbl/day until 2015, leaving prices stable and well within OPEC control. However, several factors could cause spare capacity to fall under this level, making prices more unpredictable and volatile,” said Golovushkin.
These factors include the pace of Asian demand growth, as well as increased or reduced production from
He said that during 2008-2009, continued demand growth from Asia and the
Golovushkin noted that in the next two years, 75% of the International Energy Agency (IEA)’s consumption growth forecast will occur in Asia-Pacific and the
Although the financial crisis was over, with states stepping in to support the “too big to fail banks”, real demand for goods and services in the global economy was presently still poor, Golovushkin said.
The pessimistic outlook in the shipping sector for container ships is a clear indicator of weak demand from the general public, he said.
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