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Wednesday, October 28, 2015

November Prediction of Pump Oil Price (Ron 95)

**It is easier to predict the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the compute mechanism.**

This is the fifth time I'm posting my prediction in a blog posting. Please bare that I will repeat some lines for new readers :) Also I always care to post my predictions before any official news or other analysts have given their views (typically too late after the queue starts at the stations).

Why is this sort of important? Say every month you know ahead of official price announcement and let's assume there is a price swing on average of 10 sen per month and you can fill in 35 litres. 0.10 x 35 x 12 = RM 42 savings a year. Obviously you don't feel it's a lot but every year you will always call and beg for credit card waiver of RM50 on govt service charge? Ironic isn't it? :)

Nov 2015
Global oil price has edged up slightly above $50. The avg price for Tapis crude oil for Sept was $49.68, while Oct it is hovering at $51.16 and is somewhat consistently above $50. Just moments ago crude oil gained 5.23% after EIA's (US Energy Information Administration) reports 3.4 million barrel rise in crude supplies.

MYR took a breather in October - largely due to USD being shorted after the FED decided not to raise interest rate, thus myr strengthen from a high of 4.40 to 4.15 (avg of 4.30) but has since pulled back to 4.25 levels lately. Malaysia continues to suffer from a crisis of confidence and political uncertainty, also Budget 2016 has not reveal any catalyst to bring MYR back to less than 4 to the Dollar. Even Moody's has the same thought: Moody's Says Budget 2016 'Tame'.

Domestically we received a "Kerja Bodoh" budget that is delivering so little with every corner being cut. I've talked about this in my previous post (just 2 days ago): Budget 2016: Ini Kerja Bodoh. Other than that I don't see anything interesting until the end of the year when global markets are usually more quiet during the festive season (Thanksgiving and Christmas).

Some asked why the price of crude oil has dropped in 2015?
- Strong US dollar; all commodities are priced in dollar and that includes oil.
- Organization of Petroleum Exporting Countries (OPEC); refuses to cut production in order to maintain market share.
- Oversupply of crude oil; thanks largely to US shale oil producers which is now the world's biggest swing producers.
- Declining demand; world's no.2 economy China is slowing.
- Iran nuclear deal; removes Western sanctions and thus allowing country to export oil once again.

How come our pump fuel price did not drastically drop in 2015? 
- This is primarily due to weakening MYR to the USD.

Not easy to predict next month's price. RM/L has risen from 1.78 to 1.82 which is not huge however because it should have been +15sen last round instead of +10sen I'm willing to predict that fuel price will increase by 5sen. Najib has showered you folks with his 'so called' goodies and handouts so I guess there isn't anything left. Fuel price to stay @ RM2.05 is still possible, a drop in price is out of the question so there is no harm to fill your tank before 1st November (Sunday).

Below is a table of my previous predictions way back to the beginning of 2015. My predictions are based on Tapis crude oil price, performance of Ringgit (added after Mar) & domestic politics (which was added after May). My total savings to date: RM 43.75 (I have already exceeded RM 42 and now heading towards RM50)

**It is easier to predict the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the compute mechanism.**

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