The IEA (International Energy Agency) is now very worried about the impact of today’s high oil prices on the global economy. Their chart above highlights the problem for the USA and EU. If oil prices average $100/bbl in 2011, then the EU (green column) will be paying more for its oil imports than in 2008, […]
Chemicals and the Economy
Oil prices – the Egypt factor
‘Budgeting for Uncertainty’ seemed the best title for the blog’s new White Paper. And already developments in the Middle East are suggesting this could have been a wise decision. As the above chart of average annual oil prices shows, the 1970 oil price was just $1.80/bbl in nominal terms (blue dotted line), equal to $9.94/bbl […]
China tightens lending: Saudi may pump more oil
Recent days have seen some signs that the tectonic plates under current chemical and polymer markets may be starting to shift. The most important has been the rapid rise in inter-bank lending rates in Shanghai. As the chart shows from Petromatrix, these have begun to rocket. A year ago, the rate at which banks could […]
“Rising oil prices threaten economic recovery”, IEA
The blog has gained important support for its view that oil prices are too high. and threaten the current economic recovery. In an interview with the Financial Times, the chief economist of the International Energy Agency (IEA), Fatih Birol, has spelled out its view that “oil prices are entering a dangerous zone for the global […]
Oil producers hedge their bets
The obvious is rarely a winning strategy in commodity markets. Too many players have inside knowledge to allow anyone to profit from their own position. But now and again, interesting trends do emerge from following how the major players are positioning themselves. Thus the above chart from Petromatrix provides a valuable insight into the different […]
Chemicals set for “strong” year-end as oil jumps 7%
Last week, the blog repeated its warning that crude oil was preparing for a big move, either up or down. And prices then jumped 7%, to a two-year high of $87.49/bbl. So the ‘triangle formation’ proved its predictive power again. As the above chart shows, from Petromatrix, the driver behind the move was the Large […]
Oil prices in longest-ever period of contango
Oil markets are now in their longest-ever period of contango. This is when prices for future months are higher than current levels. According to Bloomberg, they have now been in contango for a record 656 days. Keeping a barrel of crude in a tank on land costs 60 – 70 US cents/month, whilst hiring a […]
Oil prices weaken as inventories continue to build
Oil markets are an accident waiting to happen for the chemical industry. Oil inventories around the world are close to record levels, with the IEA (International Energy Agency) reporting they are over 61 days of demand. Equally, as the Petromatrix chart above shows, they are at record levels in the USA (the world’s largest market), […]
US oil stocks remain at multi-year highs
The chart above, from the insightful Petromatrix report, highlights the on-going divergence between the bullish sentiment driving prices, and the fundamental reality of crude oil markets. It totals US stocks of crude oil and the main products (gasoline, distillate and jet kero), by year. And it shows very clearly that stocks in 2010 (red line) […]
OPEC calls oil prices “beautiful”
OPEC’s meeting wrapped up quickly yesterday, with Saudi oil minister Ali al-Naimi once again saying oil prices today were “beautiful“. This highlights sentiment’s ability to take prices in the opposite direction to fundamentals. For certainly, on fundamentals, OPEC should have had a difficult session: • Quota compliance is now down at c50%, with Bloomberg estimating […]
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