Brent oil prices have reached the “$70/bbl and probably lower” level that I forecast in August. So we now need to think about where they go next. Luckily, the chart above can still guide us, as it has done since September 2010. As readers will remember, I first forecast the collapse on 18 August. I then followed this post with a detailed analysis […]
Believing conventional wisdom can destroy your profits. One example is playing out in the oil market before our eyes. Another example is the myth that China was about to become middle class. Yet income levels always made this impossible: More than 9 out of 10 Chinese earn less than $20/day By comparison, the basic state pension in the UK is 25% higher, at over […]
I imagine a version of this chart has been keeping ministers awake at nights in Riyadh and the other Gulf Co-Operation Countries (GCC) in recent months. “How did we ever allow Canada to supply more oil than OPEC to the US?” they must be worrying. ”What did we think we were doing?” This might not be quite […]
Chemistry & the Economy: 2014 Year-End Review Some excellent questions have already been submitted for my year-end webinar tomorrow with the American Chemical Society. Why have oil prices fallen? Will China’s growth recover in 2015 – and if so, will it be back to the ‘bad old ways’ of stimulus? Why are the stock prices […]
Does OPEC have a future? Or has it already disappeared as an effective force in oil markets? I am not the only one now asking this question. Saudi Oil Minister Ali al-Naimi asked the same question in the summer, suggesting OPEC Ministers should instead meet once a year, and have occasional videoconferences, adding: “We don’t need a meeting. […]
Above is today’s front-page headline from the Financial Times. As readers will remember, I launched a series of major posts in the blog on 18 August, forecasting a collapse of oil prices to “$70/bbl, and probably lower“, and that the US$ would see ”a strong move upwards“. The headline confirms I was right. The posts in the series were as follows: […]
Oil prices should be set by the balance of supply and demand. But as the chart shows, oil markets have instead become dominated by financial players, as pension and hedge funds decided to buy oil as a “store of value“. Before 2000, financial market volume (red line) had been roughly equal to annual oil production (green line). This worked well, providing physical […]
The word “panic” crept in to ICIS chemical market news reports this week, as its pricing specialists surveyed the Asian market. Polyethylene (PE) was particularly highlighted, with headlines such as: China PE tumbles $30-80/tonne on panic-selling Price war in Pakistan as panic sets in among PE suppliers At the same time, ICIS was reporting that: “Middle East suppliers may […]
I had a breakfast meeting yesterday with the investment head of one of the world’s major asset managers. He wanted to understand more about our Great Unwinding concept, and our correct mid-August forecast of $70/bbl oil prices. After that, we went on to discuss two critical and related areas: Would the oil price stay at today’s […]
Signs of stress seem to be appearing in the US housing market once more. Thus the Wall Street Journal reports: “An estimated one in seven appraisals conducted from 2011 through early 2014 inflated home values by 20% or more..Bankers, appraisers and federal officials in interviews said inflated appraisals are becoming more widespread as the recovery […]
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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.