Crude Oil Price To Average US$62 Per Barrel This Year: JP Morgan

KUALA LUMPUR, May 6 (Bernama) -- Leading global financial services firm, JP Morgan, expects crude oil price to average about US$62 per barrel this year and US$72 per barrel in 2016 due to tightening supplies and incremental demand. Brent North Sea crude for June delivery, the global benchmark, closed at US$66.45 a barrel Tuesday after hovering between US$62 per barrel and US$63 per barrel last week. "It is expected to hover around current levels and possibly cross the US$70 per barrel mark but it will retreat back," said Managing Director and Senior Country Officer for Malaysia Steve Clayton of the volatile crude oil market. As for the ringgit, he expected the currency to hover around RM3.82 against the US dollar by year-end, on the back of a stronger greenback. Speaking at a press conference, he said the US Federal Reserve's move to raise interest rates in the near future would only boost the US dollar even further. "The direction of the local currency is very much driven by the strengthening of the US dollar. It's not actually driven that much by fundamental factors within Malaysia," Clayton said. The local unit closed at 3.6080/6120 versus the greenback compared with 3.5600/5630 at 5 pm last Thursday. The market was closed on Friday and Monday for local public holidays. Meanwhile, he said the number of initial public offerings (IPO) would be probably higher this year compared with last year. "Everyone's waiting for Malakoff Corp's IPO. They want to see how it takes off in the market," he said. JP Morgan is one of the joint global coordinators for the IPO which is scheduled for May 15. "People just looked at Malakoff's fundamentals rather than look at other issues when we went on road shows in Hong Kong, London and Singapore. The response we received was very good," Clayton said. On the equity market, JP Morgan Securities (M) Sdn Bhd Executive Director of Equity Research Mak Hoy Kit said the market had a tendency to move in sync with oil prices. He said the company would flock to defensive stocks in the second half of this year, amid weaker consumption power, post the Goods and Services Tax and oil price volatility. "We will look at defensive sectors like healthcare, pay-TV, infrastructure particularly rail projects, tourism and utilities," he said. -- BERNAMA