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World Market Tumbles On Oil Supply Glut
Singapore Market Commentary | 12 December 2014
By: Shane Goh
Articles (99) Profile

Over the past 2 weeks, black gold dominated headlines. Crude oil market participants glued to their screens would have been greeted with a sea of red. The West Texas Intermediate crude oil closed at US$59.95 per barrel on 11 Dec-14, down some 40% since Jun-14 and the lowest in more than 5 years.

With a supply glut, caused by a boom in US shale gas production and the Organisation of the Petroleum Exporting Countries’ unwillingness to scale back its oil production, oil prices’ down trend looks to persist.

The pessimistic outlook on black gold has translated to share price falls for oil and gas related firms. Both Sembcorp Marine and Keppel Corporation have witnessed high single-digit declines in the past 2 weeks. However, broad stock market barometers, the Dow Jones Industrial Average and Straits Times Index, remained relatively unchanged during this period.

In the Singapore market, we welcomed the listing of 5 companies with businesses ranging from data centre property leasing to an internet platform distributing and administering investment products. Among the 5, all but mm2 Asia, a producer of movies and TV/online content, are trading above their respective listing prices.

Looking ahead, as we enter into the Santa Claus rally period, key things to look out for would be the European and Japanese central banks as the latter sinks into a recession while the former is edging close to one. Possible solutions include taking a leaf from the US and introduce quantitative easing into the system.

Currently pursuing his Chartered Financial Analyst qualification, Shane provides coverage on the property, consumer and environmental sectors at Shares Investment.

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