March Forecast of Pump Oil Price (Ron 95)

**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.**

February 2016

A rather interesting month for oil. There is speculation that the Organization of Petroleum Exporting Countries and its partners will manage to ease a global supply glut. However America’s crude producers, which are increasing output, aren’t so sure. They’ve been hedging against price declines for this year and 2018. My guess is that oil will not go above $60, and the reason for the ceiling is the tremendous resilience of U.S. shale industry. It has been proven again and again.

The ringgit is not performing up to par despite the latest data showing that the country’s international reserves are rising. Bank Negara’s international reserves, which are now at US$95bil, are set to be on the uptrend due to measures taken by the central bank since Nov 11 last year. The ringgit is now at RM4.44 against the US dollar. It has appreciated by about 1.3% against the US dollar, way below the amount that the other currencies in the region have appreciated against the US dollar. Foreign money is coming into the region and it is obvious that Indonesia is the best destination not Malaysia. Also Malaysia's creditworthiness worsened, deficit exploding to 4% of GDP business and investment "conflicts of interest" don’t pay.

Aboi's Mar'17 Forecast Analysis

MYR maintained its weakness once again (@ 4.44), there are no signs of strengthening so far. However as consolidation global oil price on average went down by less than $1 (57.67 to 56.98) hence the RM/L between January and February weaken: 2.16 vs 2.12. Nevertheless it remains high. I am forecasting either current prices to stay or it may go up further by 5 sen (RM2.30->RM2.35) for RON 95. Bear in mind that the APM is around RM 2.44 so somewhere in the middleman (oil company or petrol dealer) field is taking a profit cut by selling lower than the APM price point.

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.**

February Forecast of Pump Oil Price (Ron 95)

**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.**

January 2016

Oil prices have been falling slightly since the New Year. After a bullish announcement from the Organization of Petroleum Exporting Countries and production cuts by non-OPEC nations, the narrative has become bearish, focused on drilling for U.S. shale oil, as well as the failure of some nations to observe calls to cut output. However fundamentals are being unduly influenced by concerns about higher rig counts and the lack of compliance by OPEC oil production cut compliance. Price seems to be holding at this range $50 to $60 but there could be upside during 2017 U.S. summer driving season; late May to early September.

A somber month for the Malaysian Ringgit. BNM maintains its policy rate unchanged at 3.00% in January. The decision to hold the Overnight Policy Rate unchanged suggests that the Central Bank is more worried about supporting the ringgit than boosting Malaysia’s sluggish economy. The ringgit is Asia’s worst-performing currency since Trump’s surprising victory in the U.S. presidential elections—it has fallen more than 5% since then.

Aboi's Feb'17 Forecast Analysis

MYR maintained its weakness and is unchanged (@ 4.46). However this is overshadowed by global oil price which on average went up by $1 ($56.69 to $ 57.67) hence the RM/L between December and January actually weaken: 2.12 vs 2.16. This round I am forecasting either current prices to stay or it may go up to 10 sen (RM2.20) for RON 95. Since it is Chinese New Year if you have the chance go and fill it up as early as possible to be on the safe side.

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.**

January Forecast of Pump Oil Price (Ron 95)

**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.**

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).

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.**