Brent Crude

The panelist forecast range for Q4 2019 runs from a minimum of USD 56.8 per barrel to a maximum of USD 106.9 per barrel.

Brent crude oil prices continued to freefall over the last month, with the global oil benchmark sinking to more than a one-year low in late November. On 30 November, oil prices traded at USD 57.5 per barrel, which was down 24.0% from the same day last month. The benchmark price for global crude oil markets was down 9.5% from the same day last year and was 13.8% lower on a year-to-date basis. The announcement in early November that the U.S. would provide waivers to eight countries in order to allow them to continue purchasing Iranian oil after the implementation of U.S. sanctions on 4 November triggered the price spiral, as Iranian exports are now unlikely to fall as much as previously predicted. Moreover, Saudi Arabia, Russia and the U.S.—the world’s top three oil producers—are pumping close to all-time highs, adding further downward pressure on prices. On the demand side, signs have recently emerged of flagging activity. The Chinese economy has been decelerating in 2018, Japan recorded a contraction in the third quarter, while Q3 GDP data for the Euro area was the weakest since 2014. This likely added to investors’ concerns over the future appetite for crude oil. Going forward, our panelists see prices recovering from their current low level following such an abrupt decline, with prices likely now trading below fundamentals. However, significant uncertainty still clouds the outlook. One key factor will be whether OPEC agrees to production cuts—potentially as soon as its meeting on 6 December—in order to support prices. In addition, the possibility of an extension to U.S. waivers on Iranian oil exports and the evolution of the U.S.-China trade spat could have an important bearing on prices. FocusEconomics panelists see prices averaging USD 73.2 per barrel in Q4 2019 and USD 73.6 per barrel in Q4 2020. In light of recent developments, 4 panelists upwardly adjusted their Q4 2019 forecasts compared to last month. Meanwhile, 26 panelists kept their projections unchanged and 6 cut their forecasts. 

The panelist forecast range for Q4 2019 runs from a minimum of USD 56.8 per barrel to a maximum of USD 106.9 per barrel.

WTI

For Q4 2019, the maximum price forecast is USD 94.8 per barrel, while the minimum is USD 51.5 per barrel.

West Texas Intermediate (WTI) crude oil prices have hit a 13-month low over the last month on ample supply. WTI crude oil prices traded at USD 50.8 per barrel on 30 November, which was down 23.3% from the same day last month. The price was 16.0% lower on a year-to-date basis and was down 11.5% from the same day last year. On the international scene, the announcement in early November of U.S. waivers for eight countries to allow them to continue importing Iranian oil sent prices crashing in recent weeks. Moreover, Saudi Arabia and Russia continue to pump at near-record highs, adding further downward price pressure. Domestically, comprehensive EIA data for the week ending 23 November showed U.S. crude oil inventories rose by 3.6 million barrels over the previous week, approximately 7% higher than the 5-year average. The 23 November data also marked the 10th consecutive week that inventories have climbed, an indication of elevated supply. On the demand side, despite a strong U.S. economy, global demand for crude oil is likely abating on weaker dynamics in China, the EU and Japan. Prices are likely to rise somewhat going forward following such a sharp decrease in recent weeks which has led to oil looking oversold. Moreover, potential production cuts at the upcoming OPEC meeting in December would support prices. Greater U.S. shale production and softer demand growth, however, will limit any upward movement. For Q4 2019, analysts expect prices to average USD 67.2 per barrel, before increasing slightly in Q4 2020 to USD 68.7 per barrel. In response to recent developments, 18 panelists left their forecasts unchanged for Q4 2019 from last month, 2 of our panelists upgraded their projections, while 8 made a cut to their projections. The spread between the minimum and the maximum oil price forecasts remains relatively wide, with numerous drivers at play in oil markets in recent weeks: 

For Q4 2019, the maximum price forecast is USD 94.8 per barrel, while the minimum is USD 51.5 per barrel.

Thank you content partner Focus Economics

Colombia outlook is stable.
Economic growth weakened slightly in Q3 as the government intensified its fiscal consolidation efforts and fixed investment growth slid on weaker business confidence and a wider slowdown in manufacturing activity. Leading indicators point to a moderation going into Q4, with consumer confidence falling further into negative territory in October on downbeat sentiment over general economic conditions. The manufacturing PMI also lost ground in October–November. After failing to gain approval for the first and second draft of the tax bill, the government is set to present a notably watered-down tax reform proposal to Congress, with its original revenue target halved. Fierce opposition forced the government to abandon the planned tax of basic foodstuffs, thereby compelling a freeze on spending in order to meet the fiscal goals and avert a potential credit rating downgrade.

The economy is expected to gain steam next year, powered by higher oil prices, increased investment in the extractives sector and an upturn in domestic demand. A tighter labor market should buoy private consumption, while an acceleration in fixed investment should also fuel growth. However, although the country’s debt dynamics have improved, slashing corporate taxes could present challenges in meeting the fiscal targets, notwithstanding the positive impact on investment. FocusEconomics panelists expect GDP to grow 3.2% in 2019, which is unchanged from last month’s forecast, and 3.2% again in 2020. • Inflation inched up to 3.3% in October from 3.2% in September, as a weak peso and higher commodity prices stoked price pressures. FocusEconomics panelists expect inflation to end 2019 at 3.4% and 2020 at 3.3%. • At its 26 October meeting, Colombia’s Central Bank held the benchmark interest rate at 4.25%, where it has been since the wind-up of the protracted easing cycle at the end of April. Firmer economic activity, thanks to higher oil prices, coupled with muted inflationary pressures, motivated the Bank to stay put and maintain a neutral tone. A riskier external environment will likely lead to a tighter stance, with the Consensus predicting the policy rate to end 2019 at 4.86% and 2020 at 4.95%.

On 30 November, the Colombian peso ended the day at 3,239 per USD, weakening 1.6% over the same day in October. The recent depreciation in the peso came as the government announced its plan to submit the tax reform bill with half of its original revenue target, which would pose challenges to reducing spending or modifying fiscal goals to satisfy credit rating agencies. FocusEconomics analysts see the peso gaining further strength and ending 2019 at 3,106 per USD and 2020 at 3,095 per USD.

According to the latest GDP data released by the National Statistical Institute (DANE) on 22 November, the economy grew at broadly the same pace in the third quarter as it did in the second, dipping just marginally. In annual terms, GDP accelerated 2.7% in Q3, inching down from the previous quarter’s 2.8% which had marked the fastest pace of growth since Q1 2016. On the domestic side of the economy, private consumption growth accelerated from 2.7% in Q2 to 3.2% in Q3 as subdued inflationary pressures shored up households’ purchasing power. On the other hand, fixed investment growth tumbled to 0.7% in Q3, down from 2.3% in Q2, as financing conditions became less favorable. The downturn in this component reflected contractions in the investment of housing, along with machinery and equipment. Moreover, government consumption rose at a slower pace of 4.5% in Q3, down from 5.9% in Q2, as the government continued to strengthen fiscal consolidation measures. Turning to the external sector, export growth fell from 3.0% in the second quarter to 1.2% in the third quarter, as global demand slowed owing to heightened tensions between the U.S. and China, coupled with political uncertainties. Imports also lost some steam, growing 5.1% in Q3 from 5.7% in Q2. Thus, the external sector’s drag on growth was more severe in Q3 compared to the second quarter. In seasonally-adjusted, quarter-on-quarter terms, growth continued to weaken from 0.6% in the second quarter to 0.2% in the third quarter. While economic activity is expected to remain strong, thanks to improving domestic demand and higher projected global oil prices, lingering uncertainties around the new tax reform bill present challenges to achieving the fiscal consolidation goals and continue to pose downside risks to the growth outlook. 

“The Colombian economy is set to continue accelerating along 2019 led by higher investment. That said, the final outcome of the tax bill currently under discussion in Congress will be key to assess any potential, short-term impact on economic growth, particularly on private consumption as individual taxes will be increased. Favorably, the proposal of broadening the VAT to basic goods has been removed from the bill, easing concerns about a strong potential effect on inflation and consumption next year. In any case, seeking resources for the upcoming years remains the main challenge of fiscal policy as the fiscal path is demanding.” Daniel Velandia, chief economist at Credicorp Capital

PMI falls for the fourth consecutive month in November amid wider global slowdown in manufacturing activity Colombia’s manufacturing sector lost pace for the fourth consecutive month in November, reflecting a wider slowdown in manufacturing activity worldwide amid intensifying trade war tensions. The seasonally-adjusted Davivienda manufacturing Purchasing Managers Index (PMI) fell to 51.6 from 52.0 in October. The index thus moved closer to the crucial 50-point threshold that separates improvement from deterioration in the sector, reflecting a weaker rate of expansion in manufacturing activity. 

- From Focus Economics

No deal preparations have begun.
Leaving Europe with a prepackaged deal like the current deal would be disastrous in my opinion, but a hard Brexit seems equally as disastrous...THIS POST IS DEVELOPING