Every oil trader has known the feeling. You’ve done your sums, talked to everyone, and decided the market is going to be short of product. So you start buying discreetly, building up inventory to sell in the future at higher prices. But then the messages from other traders start coming: ‘”What would you bid for […]
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Simple stories aren’t always true. That’s certainly the case with the fiction that the fall in the number of US oil drilling rigs will soon reduce US oil production. Exxon Mobil CEO Rex Tillerson recently reminded us of this critical point: “Clearly a significant decline in rig activity did not diminish the continued growth of […]
“I don’t take the view that they (OPEC) are in any way trying to threaten other suppliers. I think they’re really kind of on a classic price-discovery exercise, which is important for all of us as investors to know.” This was the analysis of ExxonMobil CEO, Rex Tillerson, in Houston last week. And he […]
Oil market traders have been having fun in recent weeks, as they have managed to create guaranteed price movements every week: US oil inventory data is published on Tuesday and Wednesday This gives traders the chance to push prices lower as the inventories continue to rise US oil rig data is published on Friday This creates the chance to […]
In recent years, financial markets have believed that “everything is for the best in this best of all possible worlds“. Good news has taken markets higher. So has bad news – as investors assume policymakers will apply more stimulus. As a result, a whole generation of managers and analysts has grown up without having to learn the fundamentals of supply/demand analysis. And […]
There have so far been 3 stages to the oil price collapse since I first forecast this development in mid-August: The first stage saw prices reach my initial forecast target of $70/bbl in November They then fell further to reach my second price target of $50/bbl in January Since then, prices have been trading in a wide range. Daily moves of $2/bbl, […]
Why wouldn’t oil prices return to their long-term average around $30/bbl? After all, the world is facing a long-term energy supply glut. The latest monthly report from the International Energy Agency (IEA) confirms my view that the recent rally has simply been a trading coup: “HEAD FAKE “Behind the façade of stability, the rebalancing triggered by the price […]
Another week, and another record high for US oil inventories. Oil prices clearly have some way to go, before they return to being based on the fundamentals of supply and demand. Thankfully, the looking-glass world of $100/bbl prices has finally begun to shatter over the past 9 months. And we can expect prices to return to historical […]
I was kindly invited last week to give a keynote address at the annual ME-TECH conference in Dubai. Naturally, there was intense interest in my argument that oil prices were most unlikely to recover to the $100/bbl level. Instead, I suggested they would likely return to their long-term historical average of $33/bbl (in $2014). And I argued that this would be good news […]
The 10-day wonder of the SuperBowl oil rally has ended. Instead, we are returning to the world of the Great Unwinding, and prices are coming under pressure once more from the energy supply glut and weak demand. But it would be wrong not to mark the coup that took Brent prices up 26% from $50/bbl to $63/bbl […]
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Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry.
The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts.
Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.