The blog has a suggestion for a quiz question for anyone planning party games over the Christmas period: Q. What was the longest distance travelled by a cargo of crude oil in 2013? A. 9000 km (5500 miles) from Scotland to China Isn’t that amazing? We are constantly being told that supply is short, and that today’s high prices are […]
Chemicals and the Economy
Oil market hype fails to take prices out of their triangle
Pity for a moment those poor souls whose income depends on finding ever-more creative ways of justifying today’s record levels of oil prices. One by one, all their favourite stories have disappeared. Even the traditional summer warnings of record hurricane disruption have so far failed to deliver. How different it is from the start of the crisis, when the […]
Pension fund speculation boosts oil prices as consumers suffer
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 […]
Demand growth stalls as stimulus effects prove temporary
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 […]
Japan’s liquidity programme sends oil, gold prices tumbling
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 $30/bbl to […]
Crude oil’s slide puts markets under pressure
Crude oil markets long ago lost their role of price discovery. Since early 2009, they have instead been dominated by pension funds seeking to find a ‘store of value’ as the US$ weakened, along with hedge funds enjoying a money-making ‘momentum play‘. The reason has been the $tns spent by western central banks in their […]
“Its the oil price, stupid!”
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 […]
Lanxess temporarily closes plants, as demand remains slow
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 […]
Fed liquidity boosts oil prices as fundamentals weaken
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 […]
Cracks appear in crude oil pricing
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 […]
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