As long as the Cyprus banking crisis doesn't become a contagion, oil prices should be supported at current levels, says Gordon Kwan of Mirae Asset.
03/19/2013 | 02:45am EDT
SHOWS: HONG KONG, CHINA (March 19, 2013) (REUTERS - ACCESS ALL)
GORDON KWAN, HEAD OF REGIONAL ENERGY RESEARCH, MIRAE ASSET SECURITIES
1. REPORTER OFF CAMERA SAYING:
'What's your view on the latest concerns from the euro zone and its visible impact on prices?'
2. GORDON KWAN SAYING:
'I think people have overreacted on the downside. The European Central Bank have stated that what happened in Cyprus is not going to happen in other developed countries. So I think the markets will be reassured and that things will be back to normal very soon.'
3. REPORTER OFF CAMERA SAYING:
How are you looking at the higher supplies from the U.S., OPEC and its impact on prices?'
4. GORDON KWAN SAYING:
'I think OPEC could well export somewhat less this year to accommodate less demand for imports into the U.S. So this is because they need to make sure that there's not an oversupply of crude oil in the market otherwise prices would fall below $100 per barrel for Brent. And that could jeopardize their government budget as a result of lower export oil revenues. So I think that OPEC will be very, very disciplined this year to make sure that they export just enough crude to maintain $100 plus Brent crude prices.'
5. REPORTER OFF CAMERA SAYING:
'How do you see the Chinese demand - the recent data showed a decline in imports?'
6. GORDON KWAN SAYING:
'I think a one month decline doesn't make a trend. We still expect that the new government will implement reform steadily in the next two years. And this would transform the economy from unsustainable, unhealthy growth to clean and quality growth with GDP averaging 7.5% to 8% per year. And this should allow for gradual pickup in import oil as a result of still difficulties in boosting domestic oil production.'
7. REPORTER OFF CAMERA SAYING:
'Crude prices have come off sharply from this January's high. On the edge of getting into negative for this year, where do you see prices headed?'
8. GORDON KWAN SAYING:
'We expect prices to stabilize soon because we are forecasting $115 Brent spot price as a result of China's economy bouncing back and the U.S. economic recovery. So I think as long as the recent scare over the Cyprus deposit tax doesn't spread into a contagion, I think improving economic headlines should be able to support oil prices at around current levels.'