Noting the decrease in the Brent crude oil price as Opec had increased supply and global economic weakness persisted, Investec’s chief economist, Annabel Bishop, said inventory build-up and long-term oversupply would likely keep oil prices moderate for some time to come.
“China’s transition to a less energy-intensive model for economic growth has seen the global commodity cycle slump. The consequent moderation in commodity prices is projected to continue out to 2030/35,” she said.
US oil stockpiles had also increased, adding to global supply overhang, meaning the oil price might fall further, moderating the inflation outlook. Bishop added that demand for oil would likely also be dulled next year by decelerating emerging market growth, modest growth in developed economies and higher Iranian oil exports.
These factors might have been expected to translate into a petrol price cut of 20c a litre or more for January. Bishop said this would have given consumers much needed relief and diminished the base effects of CPI inflation for the first quarter.
