The Week In Numbers: Oil, Oil, Toil and Trouble

Who would have thought it? The price of oil has now fallen below $60 a barrel. And it seems that the there is no sign of the decline insight. This is amid speculation that the oil cartel, OPEC, will fiercely resist cutting oil production.

Meanwhile, the US is pumping out the liquid black gold at its fastest rate for more than 30 years, which is worsening the global oil glut. Some experts reckon that oil prices could hover around $65 a barrel for around half a year or more. However, others believe that it could fall to as low as $40 a barrel.

One of the main beneficiaries of slumping oil prices could be airline operators. According to the international airline body IATA, the world’s airlines could post record profits of around US$20b this year. The International Air Transport Association also said that revenues this year could come in at about US$750b.

This year’s improved margin of 2.7% could be bettered next year, when the bottom-line margin is expected to climb to 3.2%. That could augur well for Singapore Airlines (SGX: C6L). However, even with the oil windfall SIA’s Net Income Margin still lags the 30 companies that make up the Straits Times Index (SGX: ^STI), significantly.

Staying with Singapore Airlines, the national flag carrier has been forced to swallow its pride over a ticket-price fiasco. SIA said it would now honour hundreds of under-priced Business Class tickets, as a result of a computer glitch. Earlier, the airline said passengers would have to downgrade to Economy, accept a refund or pay the difference. Although SIA has not revealed the cost of the error, some people in the know reckon it could be as much as US$1m.

The numbers crunchers at DBS have reduced Singapore’s growth forecast from 3.6% to 3.2% next year. The economists expect a volatile year ahead with central banks around the world adopting widely different policies. DBS’s forecast is lower than the consensus view but within the Singapore government’s range of between 2% to 4%.

The bank did however point to a silver lining. It said lower oil prices could provide an upside for global economics.

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