Brent slippage points to higher downside risk for -Fry palm

Nov 28 (Reuters) – Malaysian crude palm oil could fall to 1,740 ringgit a tonne next year, down a fifth from current levels, if Brent crude falls to $60 a barrel, a top analyst said on Friday James Fry.

A global supply glut has weighed on crude oil prices this year and pushed the European benchmark to a more than four-year low of $71.12 a barrel on Friday. Weak demand for crude oil reduces demand for palm, making it less attractive for blending into biofuels.

Malaysian crude palm oil is expected to average 2,235 ringgit ($661) per tonne in 2015 if Brent is at $80 a barrel and fall to 1,985 ringgit if Brent is at $70, said Fry, president of consulting firm LMC International.

“What high crude oil prices have done to the growth of its supply while demand has slowed has been clear for everyone to see for several years, especially if you’ve visited the US and seen the shale boom,” Fry said at a conference in Bandung. Indonesia.

“Because crude oil prices have taken so long to come down from their peaks, overcapacity has become substantial.”

Brent fell more than $5 on Thursday, its biggest daily drop since 2011, after the Organization of the Petroleum Exporting Countries decided to keep its oil output target unchanged despite an oversupplied global market.

Malaysian palm oil futures fell to a five-week low of 2,150 ringgit on Friday, following steep losses in crude.

($1 = 3.3810 ringgit) (Reporting by Manolo Serapio Jr. in SINGAPORE; Editing by Himani Sarkar)