Last year’s ‘Chart of the Year’ was headlined “China’s auto sales bubble begins to burst“. Few would disagree with this view today. Similarly, there is little doubt about 2015’s Chart of the Year. It has been the focus of industry and analyst attention all year: Those who believed that argument that the world faces an […]
Chemicals and the Economy
Oil price forecasts based on myths, not proper analysis
Did your company or investment manager use $50/bbl as a forecast Scenario price for oil this year? If not, why not? And has this question even been asked, as you finalise forecasts for 2016? In recent months, many readers have told me despairingly of their efforts to suggest alternative Scenarios to last year’s “consensus” view […]
US Marcellus gas output trebles as drilling rig count halves
Simple stories aren’t always true. That’s certainly the case with the fiction that the fall in the number of US oil drilling rigs will soon reduce US oil production. Exxon Mobil CEO Rex Tillerson recently reminded us of this critical point: “Clearly a significant decline in rig activity did not diminish the continued growth of […]
Oil prices break out of their triangle – downwards
The Great Unwinding of the central banks stimulus policies is underway, as discussed last week. Oil markets have been one of the first to feel the change, as the chart shows, with prices finally falling out of the ‘triangle’ shape built up since 2008. The value of the US$, interest rates and the S&P 500 […]
US condensate exports highlight oil market weakness
Slowly but surely the myths over supposed supply shortages in the crude oil market are being exposed. As leading US investment magazine Barron’s wrote this week: “In May, U.S. production hit its highest monthly average level since 1988 and is projected to keep rising. Domestic supplies have piled up in storage, especially on the Gulf […]
Oil will be left in the ground, as gas gains energy market share
The annual BP Energy Statistics publication is a treasure trove of information for anyone interested in global energy markets. One key area is the impact of today’s higher oil prices on consumption growth, as highlighted in the chart: It starts from 1965, and shows consumption growth for oil (red line), gas (blue) and total energy (green) Oil’s […]
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 […]
Computers push oil prices higher, again
Trading volumes in financial markets are very low these days. Many ordinary investors are on holiday, and others are focused on the Olympics. So it is easy for the high-frequency computers to create major volatility – and large profits for their owners. Thus they managed to create a 1.5% fall in the S&P 500 on […]
High oil prices hit retail spending
Brent oil prices have just finished a record sequence of 240 days above $100/bbl. This was longer than the 170 days in 2008. And longer, on an inflation-adjusted basis, than in any previous period of high oil prices. In Europe, prices were actually higher than in 2008 due to the lower value of the euro […]
The oil/natural gas ratio goes parabolic
Parabolic price movements are great fun whilst they last. The dot.com technology stock boom was a great example, when prices would jump 1% or 2% a day towards its end. And then, sadly, it all collapsed. The NASDAQ technology index doubled in a year to reach 5000 during its final, parabolic run-up to March 2000. […]