The retail of price for petrol and diesel in Malaysia ought to come down in the near future. This is because at the moment, the price of crude oil in the international market is much lower than what it was at the end of May, when Government abruptly announced the retail price of petrol and diesel drastically increased to RM 0.72 and RM 1.00 respectively.
On the 5 June 2008, the RM 1.92 per litre of petrol was increased to RM 2.70. Crude oil price was trading at almost USD 140 per barrel. Today, the price of crude oil went down to just below USD 113 per barrel. It is expected that it will go down to USD 105 per barrel by end of the year.
This is because the real demand of crude oil has significantly dropped these past two months. As oil is a very elastic raw material, the shift in demand strongly affect the price of the traded commodity.
The speculators, especially rogue traders decided to abandon their position and went into near panic selling of late. Especially financial firms like Goldmann Sachs and Morgan Stanley. They are now heavily exposed and no longer able to hold their position, especially considering their financial backing for their earlier mopping exercises. Other traders might go for the short selling when this happens.
The fundamental demand for oil, especially for diesel has fallen. For one, the much anticipated Beijing Olympics has already kicked off. Two, the supply of oil production has been increased with the Americans’ announcement of their increased in production, these past two months. This actually triggered the gradual selling, which is relatively steep. The drop has been quite significant.
The retail price of petrol has shed USD 25-30 per barrel.
The forward market is also coming down as well. If the price is weak, on the front end it seemed that it is going up. In actual, it is not. The market premium should be observed. It has actually gone negative. It is now at USD 2.00 lower than the actual posted price, which actually pushing the retail price down. That is indicative that the price is going down.
This is actually a physical trade. Bottomline, the fundamentals of supply and demand still rules. The demand has ‘collapse’. As such, the physical trade is significantly reduced.
Most of the speculators are not ditching wholesale market yet. However, it is moving towards the trigger level where a supportive level is expected to be breached soon. Then the wholesale ‘collapse’ could be expected.
The fair price to speculate for retail petrol at the moment is RM 2.35 and could go as low to RM 2.10 within this year. The actual effect on the economy as a whole maybe be inelastic. However, any significant reduction will definitely give the much needed positive economical psychology to the rakyat.
Thus DPM Dato’ Seri Mohd. Najib Tun Razak might be right after all.
*Updated 310pm
Also consider reading a former trader’s hunch on the downtrend movement of the black gold.
The "thirteen million plus Ringgit" guy rambles.... 
Yes, we all can expect petrol and diesel prices to be cheaper from 1st September 2008 but the prices of other goods which have risen will not fall accordingly and so will our overall cost of living. If PM had been patient and staggered the petrol/ diesel price increases, the impact on our cost of living will not have been that bad. Increasing and adjusting salaries will assist the young and income earning to sustain the higher cost of living but not those who have retired especially from the private sector. Also the more elderly who are least marketable will also be adversely affected. These sectors of the population who have limited capabilities in adjusting to a higher cost of living will form a perpetual group of disgruntled voters. Thank you PM, the country could not have appointed a wiser and capable Finance Minister in these challenging times.
Saya memang sokong kalau harga minyak diturunkan sedikit lagi:)
Kalau berdasarkan data dan analisis, tak de sebab kenapa harga minyak tidak boleh diturunkan sikit lagi 😉
Tepuk dada, Fikir dan Bertindak 🙂 🙂
Jangan lupa sertai forum bersama saya 😉
Layari
http://TeamPemudaUMNO.blogspot.com
With the cheaper price of fuel and diesel, these would be a good asset to slam the face of the oppositions of using fuel prices issues to create their agenda and support.
But then, I wonder if ANWAR will come out with a new statement to reduce the price even lower. We will see about that. HAHA.
Of course Anwar will come out with ‘a better paln’ for this matter since this is one of his main agendas in PP election.
Wonder how low will Anwar will be willing to promise the rakyat…but obviously it will be lower than his previous offer.
well, any lower Anwar, you will successfully ‘lingkupkan’ Malaysia back to zaman batu.
[…] per liter of petrol? Delay that trip to the pump station, guys. Word is (read here) the Government will announce cheaper fuel prices very soon. World oil prices are cheaper now than […]
SEMUANYA KERANA: pilihan raya Permatang Pauh dan 16 Sept 2008…tak percaya?…anda sememangnya penyokong tegar BN. hahhaha
I called it before oil peak in my June 19th posting entitled A Trader’s Hunch Recent Petrol Oil Hike.
Haven’t lost my trader’s touch, yet. I can guess where this idea came from. Is it possible for a 50 sen drop?
eh bodoh. also because the USA dollar has strengthen as well, so malaysia will use this as a reason not to lower it so much, since the RM is weaker against the greenbag.
RM2.10? you’re having a laugh!
Yeah. Now that electricity prices has gone up by 17% and 33% for residential & commercial respectively will those prices be rolled back. Knowing the goverment of course not. If this is the case then cost of production of various goods may still be higher that before all this hike even though the fuel prices are lowered back. Actually once inflation has been introduced it is very difficult to lower it except by jacking up interest rates to lower demand.
permatang pauh la. What else… Both AAB and Najib is wrong to say that the price of barrel of oil will hit USD140, which triggered their fear. Lousy decision.
i wish..i wish that or oil price gonna be reduced to the price that’s not a burden for all of us.until then,i have to carry on with my life with full of courage and not to overspend.heeee…
oil prices will increase back to hundred thirty above at the end of the year… as they need more fuel in winter…
Not another mistake by me – no profanities, Bigdoggy – but tied to your posting on oil:
Gold futures gain on stronger oil, weaker dollar
Prices close up $11 after sliding as much as $13; copper climbs
By Myra P. Saefong & Polya Lesova, MarketWatch
Last update: 4:22 p.m. EDT Aug. 19, 2008
SAN FRANCISCO (MarketWatch) — Gold futures climbed Tuesday, recovering from an earlier slide to close with a gain of more than $11 an ounce, with the metal finding support from strength in oil prices and weakness in the U.S. dollar…”The primary trends in oil and the dollar remain up and down, respectively — which should result in gold being well supported above $750 per ounce,” said Mark O’Byrne, a director at Gold and Silver Investments Ltd.
“While oil may continue to sell off, few expect it to fall much below $100, levels considered extremely high only a few short months ago,” said Dublin-based O’Byrne, in emailed comments.
“More consolidation in the gold market looks necessary and a weekly close above $850 will be needed prior to the primary trend reasserting itself,” he said.
Dollar weakness also helped boost investment demand for gold. The dollar index (DXY:US Dollar Index Future – Spot Price DXY 77.03, +0.19, +0.2%) , which tracks the greenback against a trade-weighted basket of six major currencies, was at 76.74, down from 77.070 late Monday. It climbed as high as 77.41 earlier…The Labor Department reported Tuesday that U.S. producer prices rose by a bigger-than-expected 1.2% in July, driven higher by prices for energy, cars, food and other products.
Influential factors
“The important short-term influences on gold will be whether the dollar can keep strengthening and whether oil prices continue to fall,” said O’Byrne.
‘This autumn could see gold make one of its largest price surges to date in this bull market.’
— Mark O’Byrne, Gold and Silver Investments Ltd.
“However, it is likely that the important fundamental long-term drivers of increasing macroeconomic and systemic risk [as seen in the fresh fears regarding the financial system yesterday] and geopolitical risk,” he said.
“Inflation and stagflation are now stalking developed western economies and developing and emerging markets alike and this bodes well for gold in the long term as it was in the 1970s,” said O’Byrne.
At the same time, “physical demand is surging again in India and internationally and gold could soon rise as fast as it fell,” he said. “this autumn could see gold make one of its largest price surges to date in this bull market.”
Platinum slump
Prices for platinum and palladium didn’t exactly follow in the other metals’ footsteps Tuesday.
Platinum’s October contract closed down 3.1%, or $42.60, at $1,351.30 an ounce. September palladium futures shed $3.05 to close at $283.85 an ounce.
“The platinum group metals continue to stink up the room,” said O’Byrne. “The sell-off has been brutal, and both are down some 10% in the last few days.”
The platinum group metals are “more subject to demand destruction due to their greater industrial use, unlike with the precious or monetary metals,” he said. But “the speed and size of the correction looks overdone and these metals are pricing in massive demand destruction and a global recession.”
Do rogues traders speculate from one commodity to the other? and how do the SWFunds influence the market? And is the bottom of the credit crisis breached?
here it is on oil:
Oil stocks post gains as crude prices rebound
By Jim Jelter, MarketWatch
Last update: 4:58 p.m. EDT Aug. 19, 2008Comments: 8SAN FRANCISCO (MarketWatch) — Oil stocks racked up solid gains Tuesday as crude-oil prices staged a sharp turnaround and bargain hunters returned to the sector following three straight days of losses.
Crude benefited from a drop in the dollar, rekindling the flight to dollar-denominated commodities and wiping out earlier losses as it became clear Tropical Storm Fay no longer posed a threat to oil and gas production in the Gulf of Mexico…
(of course there is the rebate issue and that view as per Abdullah on advise from MoF2 that the ringgit will strengthen against the USD; and the subsidy will increase(this you must ask MoF2)
It is not so much of the oil price, bigdoggy, it is if PM knows anything the economics of the nation. So bigdoggy, maybe you could write another Matthais on this. (appreciate your moderation generosity and hospitality, dude):)
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Najib baru tau harga turun. anuar dah cakap masa debate dgn saberi dulu lagi.
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