Think back over the past 5 years. Can you remember a single time when oil supplies were actually difficult to find? If you can’t, then you have the same memory as the blog. Official statistics support this view. Thus last week’s US EIA report noted that “U.S. crude oil inventories are near the upper limit […]
Tag Archives | Brent oil prices
As executives return to their desks this week, they face some difficult judgement calls. As the chart shows, markets have been worryingly quiet over the summer. Most products in the IeC benchmark portfolio are unchanged. Only Brent crude oil and naphtha have moved higher - due to Syria concerns - whilst benzene has moved lower. But even these are relatively minor movements. This […]
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 $30/bbl to […]
Crude oil markets long ago lost their role of price discovery. Since early 2009, they have instead been dominated by pension funds seeking to find a ‘store of value’ as the US$ 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 […]
Chemical markets continue to paint a very worrying picture of the state of the global economy. There has been no improvement in demand over the past week, since the blog first raised the alarm. Instead, plants are being temporarily closed because of the slowdown. Lanxess, for example, announced the closure of two plants in Belgium […]
Oil prices long ago moved away from the fundamentals, as the US Federal Reserve targeted asset price bubbles in a misguided effort to magic up consumption gains. Thus we have to focus on sentiment indicators, as in the chart above, to anticipate likely developments: • Monthly US oil inventories hit a new record for November […]
Crude oil and the major commodity markets have been a “fool’s paradise” in the past 4 years, created by the arrival of the central banks’ massive liquidity programmes. Pension funds rushed to buy, in the belief they would be a “store of value”. Hedge funds followed them as a momentum play, encouraged by analyst reports […]
Crude oil prices remained at a record level for the second year running in 2012. As the chart shows, Brent prices averaged $112/bbl versus $111/bbl in 2011 (blue line). By comparison, 2008 averaged $97/bbl, or $102 if adjusted for inflation (red): • 2008 still holds the record for the highest-ever daily price at $144/bbl on […]
The battle between the major central banks and the fundamentals of supply/demand is starting resemble the battlefields of the 1st World War. The generals running the campaign believe (with the exception of the Bank of Japan) that today’s crisis is simply due to a lack of liquidity. They ignore the impact of demographics and the […]
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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.