Archive for the ‘oil fundamentals’ Category

No demand response to crude price crash? ‘Show us the money’ say motorists in India and China

Crude oversupply is a well-known story by now. Let’s talk about demand growth – or the absence of it. Why has the near-60% crash in crude as measured between the high of mid-June 2014 and the trough of January this year ($115.06 and $46.59/b respectively for front-month Brent) not produced a demand response from Asia?

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The price of oil reaffirms the lesson of a legendary wager

John Kingston is President of the McGraw Hill Financial Global Institute and Director of Global Market Insights. He continues to observe energy markets after his many years with Platts.

When you look at a chart of the price of oil during the last six months, it says a lot of things. One of them is that Julian Simon has won again.

I’d long known about the legendary Julian Simon-Paul Ehrlich bet, made in the early 1980’s at the tail end of a commodity boom. What I didn’t know, until I recently stumbled upon an academic paper written by Yale professor Paul Sabin from 2013 that was turned into a book called The Bet, was how much the two of them truly despised each other. Why I thought the bet was sort of friendly is a mystery; it was actually part of a long-standing open hostility.

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As oil prices push towards $60/b, are we witnessing a “dead cat bounce”, or is the market finding some equilibrium?

On February 9 over 500 delegates crammed into London’s Mayfair Hotel for the Platts London Oil Forum 2015. I’ve lost count of how many times I’ve attended this annual event, which traditionally kicks off IP Week – it’s a fantastic opportunity for the industry to come together, and invariably features stimulating debate.

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California’s cap-and-trade no more than road bump in gasoline’s steep price decline

Drivers in car-crazed California paid more than 10% more for their gasoline at the start of the year. They just didn’t realize it.

As expected, California’s introduction of the emissions cap-and-trade program for transportation fuel suppliers boosted Los Angeles regular gasoline rack prices nearly 17 cents in the first two days of 2015 to $1.5885/gal. The rack is the wholesale level where gasoline and diesel is moved onto those often-shiny tanker trucks that hold roughly 9,000 gallons.

What barely changed right away was the price up and down the supply chain.

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Is the tide about to turn for oil prices?

The International Energy Agency on January 16 gave the beleaguered oil industry something to feel happy about, suggesting that an oil price recovery could be around the corner. However, producers suffering from sub-$50/b oil will still have some time to wait yet before they can expect any real improvement in prices.

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EIA analysis: an enormous build in oil products

The numbers in this week’s Energy Information Administration statistical report showed a build in product inventories that can fairly be called “staggering.” You can read our analysis here. 

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Guest blog: Are low oil prices good or bad for oil traders?

Guest blogger Jonathan Kingsman is the founder of Kingsman SA, which is now a unit of Platts, and he remains a Platts consultant.

Are low oil prices good or bad for oil traders?

In theory oil traders should not care about the price of oil; as they have reminded us many times recently, the big trading companies trade differentials and spreads, not flat (outright) price.

In a trader’s ideal world oil prices would fluctuate in a range, giving traders just enough volatility for risk-free plays on shipment dates and tonnages.

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The plunging US Gulf Coast diesel market

It has been a wild ride for the US Gulf Coast diesel market, driven by oversupply and tax considerations in just the last two weeks.

The longer-term market is reflecting that glut, because the NYMEX ULSD contract is in a relatively steep contango of 10 cts/gal out over the next year. But in the short-term, it’s been the physical Gulf Coast market that’s been the most interesting.

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Guest blog: Scrap “The Call on OPEC”

Steven Kopits is the President of Princeton Energy Advisors, and has been a guest blogger on The Barrel numerous times in the past. 

Seven years ago, when I first turned my attention full time to oil, one of the strangest concepts I encountered was the “call on OPEC”. The call on OPEC means different things in different contexts, but fundamentally, it is as non-economic and culturally imperialist a term as one could imagine.

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The diverging paths of gold and oil in 2014

Gold is a commodity that in the real world doesn’t get used for a whole lot of truly important things, but is seen as a financial asset, and always has been.

Oil is a commodity that in the real world makes modern life possible, gets used for many, many important things, and yet is also seen as a financial asset. It hasn’t always been as that last descriptor, but it’s been that way for awhile.

In the past year, the fundamentals of the industrial asset–oil–ripped through the market in the last few months of the year and sent the price of that commodity plunging. And during that same year, the so-called “safe haven” of gold actually turned out to be something like that in the face of global upheaval, after an extremely bearish 2013. The metal’s price basically didn’t do much of anything over the course of the year.

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