December 2016
Oil prices have gained 25 percent since mid-November, helped by expectations for OPEC's supply cut and solid U.S. economic figures that have also bolstered equity prices. Nevertheless the market is still taking a wait-and-see approach on the official start of the landmark deal reached by the Organization of the Petroleum Exporting Countries (OPEC) and several non-OPEC members to reduce their output. The deal is set to kick in from Jan. 1. OPEC and non-OPEC producers are expected to lower production by almost 1.8 million barrels per day (bpd), with Saudi Arabia, OPEC's largest producer, agreeing to bear the lion's share of the cuts. If there's any misstep or any indication of disagreement to (the deal), we would see crude prices dropping back.
The Malaysian ringgit has fallen to its lowest since the 1998 Asian Financial Crisis, as dollar bullishness and domestic economic weaknesses weigh on the beleaguered currency. The US Federal Reserve raised its target federal funds rate to a range of 0.50 to 0.75% on Dec 14 contributing towards Ringgit's weakness. The Fed, which raised interest rates last week, has penciled in three rate increases in 2017. Malaysia's central bank, Bank Negara Malaysia, has also been moving to clamp down on non-deliverable forward trades to curb speculative activity on the offshore market, causing some concerns in the currency trade and prompting outflows. The currency also came under pressure due to the political scandal in the country over Malaysia's deeply indebted sovereign fund. Investigations and court cases were continuing globally into allegations that billions of dollars were looted from Malaysian state development fund 1Malaysia Development Berhad (1MDB).
The Malaysian ringgit has fallen to its lowest since the 1998 Asian Financial Crisis, as dollar bullishness and domestic economic weaknesses weigh on the beleaguered currency. The US Federal Reserve raised its target federal funds rate to a range of 0.50 to 0.75% on Dec 14 contributing towards Ringgit's weakness. The Fed, which raised interest rates last week, has penciled in three rate increases in 2017. Malaysia's central bank, Bank Negara Malaysia, has also been moving to clamp down on non-deliverable forward trades to curb speculative activity on the offshore market, causing some concerns in the currency trade and prompting outflows. The currency also came under pressure due to the political scandal in the country over Malaysia's deeply indebted sovereign fund. Investigations and court cases were continuing globally into allegations that billions of dollars were looted from Malaysian state development fund 1Malaysia Development Berhad (1MDB).
Aboi's Jan'17 Forecast Analysis
MYR continues to slide downhill yet again (4.32 to 4.46). This time it really is a double whammy as the average oil price went up from $49.12 to $56.69 so the RM/L between November and December weaken: 1.78 vs 2.12. I am forecasting that fuel price to go sky high as much as RM2.20 (up by up to 30 sen) for RON95. This isn't my first with such a big forecast, back in July 2016 the same was made but was slightly raised by 5 sen. Would the coming announcement be the same case? Very...very unlikely.
Below is a table of my previous forecasts since the beginning. My forecasts are based on Tapis crude oil price, performance of Ringgit and domestic political matter.
**It is easier to forecast the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the exact compute mechanism.**
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