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Oil prices under pressure as US oil and gas output rises

Just 10 years ago, then BP CEO John Browne shocked the oil industry by suggesting that oil prices might “temporarily” rise to $40/bbl due to an imbalance of supply and demand, before falling back below $35/bbl again. Of course, prices in fact moved much higher, as policymaker stimulus in first the US and then the […]

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World Aromatics and Derivatives Conference next week

Our 13th annual World Aromatics & Derivatives Conference takes place in Berlin next week.  Jointly organised as always by International eChem and ICIS, it features a must-hear list of speakers: ExxonMobil:  Europe Business Director Tim Stedman will give a global market overview Dow Chemical: Global Business Director Pieter Platteeuw will discuss the future for benzene […]

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Oil price fall set to push Japan back into deflation

Could Japan actually go bankrupt at some point in the future?  This was the question left hanging in the air after Friday’s panic at the Bank of Japan, when its Governor forced through his new stimulus policy on a 5 – 4 vote. Financial markets’ first reaction was to assume this was a coup de théâtre on […]

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OPEC faces New Normal dilemma as oil demand slows

Yesterday’s post described how OPEC oil producers are seeing their export sales to the US start to disappear.  But this, of course, is only one side of the story.  As the chart from the Wall Street Journal shows, Saudi needs a $93/bbl oil price to balance its budget.  Most of OPEC needs a higher price.  Only Kuwait, UAE and Qatar need […]

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Saud, FDR

Saudi oil policy shaped by defence dependence on USA

The world now faces a supply glut in almost every source of energy, including oil, gas and coal.  It is also seeing major increases in output of key products including gasoline, diesel and petrochemicals.  Yet as the International Energy Agency has warned, “the recent slowdown in demand growth is nothing short of remarkable.” The blog is therefore launching today a 3-part series […]

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Oil prices break out of their triangle – downwards

The Great Unwinding of the central banks stimulus policies is underway, as discussed last week.  Oil markets have been one of the first to feel the change, as the chart shows, with prices finally falling out of the ‘triangle’ shape built up since 2008.  The value of the US$, interest rates and the S&P 500 […]

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Europe unprepared for hard winter without Ukraine gas

There is an alarming naivety about Western policymakers’ response to events in the Ukraine.  They have simply chosen not to recognise that Russia’s strategic objectives are no longer about building links with Europe, but are instead about creating a Eurasian Economic Union (EEU). Thus they assume that Russia will always put its economic interests ahead of its political objectives.  And […]

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Could the oil price triangle be close to cracking?

As discussed yesterday, energy markets are now going through major change.  Many of the investment banks who led the move to higher prices post-2008 are closing their commodity trading desks and withdrawing from the markets. Equally, the physical traders recognise that trying to push prices higher, without a real geopolitical threat, is like trying to push water uphill.  […]

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Oil consumption growth has slowed as prices have stayed high

As promised yesterday, the blog looks today at the impact of today’s high prices on oil consumption growth. As the chart, based on BP data shows, the ‘easy money’ policies of the central banks have only partially mitigated the impact of the oil price rally since 2009.  Consumption growth has not fallen to the 0.8%/year level […]

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Oil price costs remain close to 5% of global GDP

Oil markets have been driven by speculative excess since 2009.  None of the factors that were supposed to create supply shortages have ever occurred.  Markets have never even been close to scrambling for product.  And the rallies are getting shorter and shorter, as this simple fact is finally being better understood. Thus traders’ most recent efforts to create […]

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