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Crude may climb back to $90-100/bbl: Deutsche Bank

India will be one of the big contributors to global growth in 2015, that’s the word coming in from Gunit Chadha, Co-Chief Executive Officer – Asia Pacific, Deutsche Bank.

In an exclusive interaction with CNBC-TV18’s Shereen Bhan, Gunit Chaddha also said that despite the recent volatility in global markets in the backdrop of global growth concerns, Deustche Bank expects seven out of ten big nations to grow in 2015. He feels the US will drive global growth, but Europe may struggle, as geopolitics remains the biggest risk increasing chances of Europe slipping into recession.

Furthermore, Deustche Bank expects crude prices to head towards the USD 90 – 100 a barrel level soon, he adds.

Below are edited excerpts from the interview:

Q: What does the global market scenario look like right now?

Chadha: It’s clearly been six weeks of great volatility having come back in the markets right. Now whether that started to happen because a weak German Data, whether it was International Monetary Fund (IMFs) more sober report on world growth I mean there were virtually pricing in a recession in Europe with a 30 percent probability. I was in US at time of the IMF meet and I can tell you people walked in happier and walked out feeling much more concerned whether world growth will be in to 2015.

However, we do believe that 7 of the 10 largest countries globally will grow faster in 2015 relative to 2014. We think US will be the biggest driver of that growth. We think US grows from sub 2.50 percent this year to north of 3.50 percent in 2015. We think India will be a big contributes to growing from 5.50 to 6.50 percent into next year. China we don’t believe there is a hard landing out there even the growth comes off, Europe will struggle. Europe will grow but will struggle growing at about 1 percent in to 2015.

Q: As far as other asset classes are concerned, we have seen crude prices collapsed. How much of a positive is that going to be for global growth specifically for countries like India?

A: It is our estimate that for every USD 10 a billion barrels that crude falls the global gross domestic products (GDP) expands by 0.4 percent. So it’s a pretty significant impact and specially the oil importing countries. One can’t extrapolate what’s happened over the last 30 days into what will happen over the next 3 years. So it will be knife to suggest that crude has found its own level in terms of columbarium in mid 80’s. Crude could well be back into the 90’s and 100. In fact, it is the Deutsche Bank focus that crude will head that way.

Q: By when?

A: We think it will be held that way in 2015 because if we have a more constructive view of global growth and the world around then you have to argue that unless Shale gas becomes such a overwhelming supplier of energy largest to US we expect that but the transportation of gas right is an issue and as a result that takes time. So that equilibrium may not happen in 2015 and as result oil prices could be starting to trend up. So until then it is a big opportunity for Countries whether it is India or any many other countries in the region Japan, China and Thailand etc.


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