Lower fuel prices on the horizon?
With impending elections in US and France, strategic oil reserves to be released as a political move to placate voters.
According to an analysis by OCBC Investment Research, this maneuver may temporarily lower fuel costs, unless a more fundamental driver such as low fuel demand from other consuming countries emerges.
Here's more from OCBC:
Newswires such as Bloomberg and Reuters have reported that France is in talks with the US and Britain on a possible release of strategic oil reserves to push fuel prices lower. Of note is the fact that 2012 will be an election year for both the US and France, and politicians may have to placate voters’ concerns about rising fuel prices. However, a coordinated international effort is required to have an impact on the oil markets, and even if this is achieved, we only expect a temporary downward pressure on oil prices unless a more fundamental driver (e.g. low fuel demand due to poor economic health in major consuming countries) emerges. Meanwhile, we maintain our Overweight rating on the broader sector, with Keppel Corporation [BUY, FV: S$12.27], STX OSV [BUY, FV: S$2.25] and Ezion Holdings [BUY, FV: S$1.05] as our preferred picks.