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 […]
Chemicals and the Economy
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. […]
ExxonMobil expect gas use to rise 60% by 2040
ExxonMobil’s annual energy review is always a fascinating read. This year’s issue looks out to 2040 for the first time. It thus forecasts the relative share of the major fuels over the next 30 years. Interestingly, it also shares the blog’s belief, as set out in our ‘Boom, Gloom and the New Normal‘ eBook, that […]
Brent’s premium to WTI hits Europe’s energy users
Europe is at the eye of the storm when it comes to energy pricing. This is the last thing required by its struggling economy. As the chart shows, Brent in euros (green line, RHS) is now back at the same level as June 2008, whereas WTI is 35% cheaper (black line, LHS). Such a divergence […]
Investment banks reportedly dominated oil trading in US futures markets as prices spiked in June 2008
The investment banks have maintained a consistent focus on oil market supply disruptions and demand surges in recent years, alongside forecasts of sharply increasing prices. We discussed their role in more detail in the recently published Chapter 3 of our new free eBook, ‘Boom, Gloom and the New Normal‘. As the above chart from the […]
ExxonMobil suggests $60-$70/bbl oil
The CEO of ExxonMobil, Rex Tillerson, has provided powerful support for the blog’s long-held view that oil prices are well out of line with fundamentals. He told the US Senate that: “If you said: ‘If I had access to the next marketable barrel, what would it cost?’, its going to be somewhere in the $60 […]
China’s Dalian trading suggests trouble lies ahead
They don’t ring bells at market tops, to warn about what might happen next. But the above chart may turn out to be the next best thing. It shows the relationship between WTI crude oil prices (blue line) versus LLDPE (linear low density polyethylene, red line) on China’s Dalian futures exchange. The exchange has been […]
Super-computers party, as energy markets trade at record ratios
Something very strange has been happening to US energy prices over the past 2 years. The chart above shows the ratio between WTI crude oil pricing and natural gas: • It was between 6.0 and 13.0 for 22 years between 1986-2008, with some minor exceptions, and averaged 9.9. • Yet since January 2009, it has […]
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