“Within 20 years, we will be an economy or state that doesn’t depend mainly on oil“. This critical statement from Saudi Arabia’s deputy Crown Prince has been lost in the hype surrounding Q1’s hedge fund-inspired rally in oil, commodities and Emerging Markets. There has seldom been a better example of markets failing to see the […]
Chemicals and the Economy
Oil market speculators profit as central banks hand out free cash
Oil markets are entering a very dangerous phase. Already, many US energy companies have gone bankrupt, having believed that $100/bbl prices would justify their drilling costs. Now the pain is moving downstream. The problem is the central banks. Hedge funds have piled into the oil futures markets since January, betting that there would be lots […]
China’s rising exports: less about growth, more about exporting deflation
China’s move towards self-sufficiency is radically changing global oil and petrochemical markets,as I describe in my latest post for the Financial Times, published on the BeyondBrics blog Markets used to cheer when China’s exports rose, believing this showed the global economy was in good shape. They are still hopeful today, despite the 25 per cent fall in February’s […]
Prepare for $10-$15/bbl oil as Iran, US return to the market
Oil markets finally entered their “give-up phase” last week. Amazingly, it is now nearly 18 months since the start of the Great Unwinding of policymaker stimulus in August 2014, when Brent was still $105/bbl. On Friday night, Brent closed at $29/bbl. As ICIS Chemical Business (ICB) notes in its latest editorial: “International eChem’s Paul Hodges […]
Oil hits $30/bbl – and suddenly, analysts forecast lower prices
Yesterday, oil prices reached my long-held $30/bbl forecast level. And suddenly, it seems, all the leading analysts have begun to forecast lower oil prices. As Reuters reported: “Adjusting to the price rout, analysts have been shifting their price outlooks downward, with Barclays, Macquarie, Bank of America Merrill Lynch, Standard Chartered and Societe Generale all cutting […]
Expect $25 – $30/bbl oil and lower chemical prices in 2016
More than $2.3tn was wiped off the value of global stocks last week as China’s slowing economy and currency depreciations spooked investors around the world, leading to the worst start to a year for markets in at least two decades. This is the Great Unwinding of policymaker stimulus in action. Worse is likely to come. […]
Financial markets feel impact of the Great Unwinding
Its not been a great start to the year for those who have trusted in conventional wisdom: Western stock markets have been reeling, with the US S&P 500 Index down sharply since Monday It has been the worst opening for world stock markets since 2008 – not a good year for investors China’s currency has […]
Chart of the Year – Oil prices return to natural gas linkage
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 […]
US, Iran to sell oil in January as Libya ramps up volumes
Both the US and Iran are likely to be moving oil into world markets early in the New Year. The lifting of the US export ban has led to early announcements of oil sales: Vitol will move the first cargo via the Enterprise terminal in Houston in early January. Iran is expecting to have sanctions lifted around the same […]
$25/bbl oil – probably now only a question of “when”, not “if”
Oil prices are just $1 or so away from falling back into the $10 – $35/bbl range that has dominated most of history. Thus we are now reaching a second critical moment in oil markets since Stimulus began in 2009, as the chart shows: The first was the end of the Stimulus rally which ran […]
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