Life doesn’t get any easier for Europe’s olefin producers and the consumers who depend on them. As the chart shows, based on latest APPE data, operating rates averaged just 78% in H1. This is almost as bad as H1 2009, when they were 76%. And it is a long way away from the 90% levels […]
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Last week should have been a great week for the speculators. As in July 2008, they were able to spread the rumour of imminent Middle East war and upheaval. 5 years ago it was the threat of Israel bombing Iran’s nuclear facilities, and leading to a blockade of the Straits of Hormuz. This time it […]
Something very strange has happened to oil prices since 2009, as the chart of the ratio between US oil and natural gas prices shows: • Between 1986-2008, the ratio averaged 9.6, and was typically in the 6 – 14 range (6 is oil’s relative energy content versus natgas, whilst 14 was seen during the first […]
The blog still owns the lapel button it was given when running ICI’s feedstock and petchem trading office in Houston, Texas. Its advice for any trader is excellent – ‘The Trend is Your Friend’. But as all traders learn over time, there are moments when the trend can change. And sometimes, when change happens, it […]
As the blog discussed yesterday, central banks have now kept oil prices above the historical $10-30/bbl range for 10 years. But can they remain there forever? What might bring them back in line with the fundamentals of supply/demand? And what would be the risks if this happened? The background can be simply stated: • Investors […]
Since 1900, as the chart shows, oil prices have never been so high for so long as now. Until 2003, they had only been above $30/bbl for 4 years between 1979-1982, during the OPEC production cuts in the Iran crisis. But since 2004, they have been continuously above this level. The reason is the misguided […]
Brent crude oil prices have now dropped $20/bbl since their February peak at $119/bbl. The major drop has occurred this month, following the Bank of Japan’s decision to introduce its own massive liquidity programme. This confirms the blog’s long-standing argument that the fundamentals of supply/demand had nothing to do with oil’s rise from $30/bbl to […]
Have you ever wondered, as you pay your energy bill or fill the fuel tank in your vehicle, just why oil prices have risen so much on the past decade? The question occurred to the blog when reading a Reuters report of the latest Outlook from the International Energy Agency (IEA). It notes the IEA […]
Crude oil markets long ago lost their role of price discovery. Since early 2009, they have instead been dominated by pension funds seeking to find a ‘store of value’ as the US$ weakened, along with hedge funds enjoying a money-making ‘momentum play‘. The reason has been the $tns spent by western central banks in their […]
Famously, when Bill Clinton ran his successful presidential campaign in 1992, his advisers would remind him of the key message with just one phrase “Its the economy, stupid!”. Today’s policymakers would do well to maintain a similar focus on the oil price, if they want to understand today’s lack of demand. Somehow, everyone seems to […]
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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.