Volatility continues to dominate oil markets, as the above chart confirms. Some weeks have seen prices move by over 18%. These are extraordinary moves in a market which is very well supplied, with near-record inventory levels. Some recent daily moves are equally extraordinary, with prices jumping $2.50/bbl on Tuesday. The volatility highlights the power of […]
Chemicals and the Economy
ExxonMobil, Saudi Arabia, differ on oil outlook – or do they?
If asked about the outlook for prices, oil company CEOs normally duck the question. And they certainly never disagree in public with Saudi Arabia, the world’s leading oil producer. This is what makes the recent speech by ExxonMobil CEO, Rex Tillerson, so interesting: “I don’t quite share the same view that others have that we are somehow […]
Oil markets enter the “post-fact economy”, where details of supply/demand no longer seem to matter
Once upon a time, oil markets were based on facts. Producers and consumers focused on trying to understand what “would” happen”, whilst the speculators placed their bets on what “could” happen. In those days – even 20 years ago, as the chart shows – the role of the speculators on the futures markets was very […]
6 impossible things not to believe about oil before breakfast
“Sometimes I’ve believed as many as six impossible things before breakfast.” Oil traders know how the Queen felt in Lewis Carroll’s famous book, Alice Through the Looking-Glass. The list of impossible things that they are being asked to believe grows almost by the day: Last week, prices jumped 4% on the basis that strong […]
You’ve seen the Great Unwinding; get ready for the Great Reckoning
Companies and investors now need to prepare for the Great Reckoning, as I describe in my latest post for the Financial Times, published on the BeyondBrics blog We have reached the second anniversary of the Great Unwinding of policymaker stimulus. Almost inevitably, this now seems likely to be followed by a Great Reckoning, a consequence […]
Lack of affordability limits gasoline demand growth
How much of your day’s wage does it cost you to buy a US gallon of gasoline? This chart from Bloomberg shows the answer for 61 countries, based on prices for 95 octane grade at the end of Q2: Bankrupt Venezuela is most affordable at 1% of a day’s income (based on GDP/capita) […]
Wrong assumptions on China growth and oil prices mean danger lies ahead for refiners and polymer producers
It could be a very difficult H2 for anyone involved in the Asian oil and polymer markets. And given the global importance of these markets, everyone around the world will also feel the impact. The issue is that most business strategies have been based on 2 increasingly unlikely assumptions: Companies all assumed that oil […]
Oil heads back to $30/bbl and probably lower
There was never any fundamental reason why oil prices should have doubled between January and June this year. There were no physical shortages of product, or long-term outages at key producers. But of course, there was never any fundamental reason for prices to treble between 2009 – 2011 in the Stimulus rally, or to jump […]
Auto sales and the oil price: the Great Unwinding continues
Serious questions need to be asked about the likely level of future demand growth for oil and auto sales in Emerging Markets (EMs), as I describe in my latest post for the Financial Times, published on the BeyondBrics blog Oil market volatility has reached near-record levels in H1 this year, as the first chart shows. […]
Europe’s oil product glut halves gasoline margins in 2 weeks
We are approaching the 2nd anniversary of the Great Unwinding of policymaker stimulus, which began in August 2014: The initial movement was very sharp, with Brent falling 53% by January and the US$ rising 23% by March Oil then saw an initial correction – with Brent recovering to being 37% down by May during the “oil […]
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