Despite the fact that global crude oil prices may remain stubbornly high into the near future, supply-and-demand conditions may mean prices do not to show a sharp rise in the second half of this year, an economist said yesterday.
The economist further expected global crude oil price trends to impact Taiwan’s headline inflation, a critical warning mark for the central bank.
“The continuously slowing economies of major developed countries has suppressed overall demand for crude oil,” Liang Kuo-yuan (梁國源), president of Taipei-based Polaris Research Institute (寶華綜合經濟研究院), said in a conference held by the Taiwan Research Institute (台灣綜合研究院).
That has meant that several global research institutes — including the US Energy Information Administration (EIA) and OPEC — have cut their forecasts for global crude oil demand for this year more than once, Liang said.
On the supply side, Liang said supply-and-demand conditions remain stable at the moment, despite the international showdown over Iran’s controversial nuclear activities which may have a drag effect on global crude oil supplies.
Liang said these conditions provided more evidence that global demand on crude oil could rebound in the second half of this year when cold winter weather kicks in.
However, prices for crude oil globally may stay at their current high levels, with the full-year average price of New York’s West Texas Intermediate (WTI) crude oil standing at US$93.9 per barrel, Liang said, citing EIA’s latest forecasts.
Inflationary pressure in Taiwan may remain modest with these conditions in the global crude oil market, Liang said.
Liang said the annual consumer price index (CPI) growth for last month marked the highest level since September 2008 with a rise of 2.46 percent, but the level was in line with his expectations.
“We have already forecast that headline inflation may post year-on-year growth of more than 2 percent for the third quarter,” Liang said.
Liang maintained the view that headline inflation may rise 1.9 percent this year, unchanged, and in line with the Polaris Research Institute’s June forecast.
Modest inflationary pressure, coupled with continuous sluggish economic momentum, would lead the central bank to maintain policy interest rates at its board meeting next month, he added.