The oil prices have been very volatile lately. According to the data published by Energy Information Administration, U.S., the Europe Brent spot price has touched a daily average high of $143.95 per barrel on July 3, 2007 during the bull phase and then fallen to a low of $33.73 per barrel on Dec 26, 2008. The fall from the peak has been quite steep and was triggered with the slowdown in the demand of oil owing to the economic recession and credit crunch.
Showing posts with label Oil Price. Show all posts
Showing posts with label Oil Price. Show all posts
May 10, 2009
Feb 19, 2008
Crude oil crosses $100 mark again
The crude oil prices jumps back over $100 from $97 per bbbls earlier after the news of blast in a Refinery in Texas. This is second time that oil prices have breached the $100 per barrel level. About one month back the oil prices touched the triple digit mark for the first time but soon retreated back. During the recent recession fears the prices fell back to the level of $80s. Some of the retreat was due to better supply over demand. Even though the recession fear is not totally out, and the supply-demand equation in the near future is intact, the oil prices have been rising because of speculation.
Some of the possible triggers for the recent uptrend seen in the oil prices:
OPEC meeting for decreasing production
Political issues between U.S. and Venezuela
Exxon-Venezuela conflict
Political instability in Nigeria
Blast in Texas Refinery
Some of the possible triggers for the recent uptrend seen in the oil prices:
OPEC meeting for decreasing production
Political issues between U.S. and Venezuela
Exxon-Venezuela conflict
Political instability in Nigeria
Blast in Texas Refinery
Jan 14, 2008
Soaring Crude Oil price and its impact on India
With the crude oil touching $100 per barrel in the very first week of the year, it is expected to brings a bitter taste all over the world except the oil-producing countries.
But how about India? India imports around 76% of its domestic demand and the increase in oil price is always a matter of concern for the policy-makers. But this time story is not all the same, while one side the international crude oil price is at all time high, the Rupee has appreciated by more than 12% which is highest at least last 20 years. The appreciation of domestic currency has offset the impact of high price to some extent.
The last increase in the domestic oil price was there in June, 2006 and which was followed with downward revision twice. The oil price has huge impact on general pricing and hence inflation. With the moderate and negligible increase in oil price government has well maintained the inflation and common man is happy about it. But, the bigger picture is quite ominous. The major supply of oil in India comes from the PSU’s like IOCL, BPCL, and HPCL. As per MoneyControl, Petroleum has an under recovery of nearly Rs 9.5, diesel Rs 11.3, LPG Rs 380 per cylinder, and kerosene Rs 21. This under recovery includes the marketing, which has to be shared equally between marketing companies (ONGC, GAIL etc) , upstream companies(IOCL, BPCL etc) and government .With crude oil price peaking all time high and subsidized petroleum price in domestic market, these companies are making huge losses. A part of loss is swallowed by the government by issuing oil bonds to these companies and rest partially compensated by the three marketing companies ONGC, Oil India, GAIL.
The political aspect of the pricing can also not be ignored. The central government coalition lost the election in Gujarat, Himachal and even in Punjab. The Lok Sabha election is going to be held in 2009 and government has to rely of appeasement approach. Left has already out its deep concern over any plan of increasing oil price.
Now, how the price moves in international market and what step government takes to tackle the situation is going to be quite interesting.
Jan 11, 2008
Peak Oil : Myth, Fallacy or Crisis?
Recently I attended a lecture by Dr. Marian Radetzki, Professor at Lulea University, on “The Fallacies of Peak Oil". The facts presented by him instigated me to do some findings of the complete situation and views from the peak oil people.
Peak Oil concept first appeared in 'Hubbert peak theory' which says that peak oil is the time at which the global petroleum production is maximum. The argument is based on the assumption that the global production rates of petroleum follow an approximate normal (bell shaped curve). Thus at peak oil point half of the total oil reserves of the world would have been consumed. After the peak oil the production of the oil should decrease and the prices of the oil should rise steeply.
Since the oil prices have risen very steeply in recent times and have broken all records and crossed the $100 per barrel mark for crude oil prices, many peak oil proponents argue that peak oil has arrived and if the consumption of oil is not controlled the reserves will not last longer than five years.
In 1974 Marion King Hubbert, a geo-scientist at the Shell research lab, predicted that peak oil would be in 1995 at about 12 Gbbl (gigabarrels) per year. Since then there have been many changes both in the consumption pattern and production rate and estimate of the oil reserves. Oil production rate has more than doubled and still the peak didn't arrive because of increase in the estimated global reserves of oil during this period.
ASPO (Association for the Study of Peak Oil and Gas), an informal network of scientists interested in determining the peak oil and its impact, predicted that global production of oil peaked in 2004 at about 23 Gbbls. However, in 2005, ASPO revised its prediction for the peak oil to the year 2010 taking into account both conventional and non-conventional sources of oil.
The opponents of the peak oil argue that the steep rise in prices of oil in 2004 was not alone and it was a trend observed in all major commodities. Moreover the increase in prices of oil is dependent on the political situation and some temporary supply side constraints. They argue that the estimation of the oil reserves have been increasing as is the oil production. Hence despite of increase in production the peak oil situation is far from us.
Peak Oil concept first appeared in 'Hubbert peak theory' which says that peak oil is the time at which the global petroleum production is maximum. The argument is based on the assumption that the global production rates of petroleum follow an approximate normal (bell shaped curve). Thus at peak oil point half of the total oil reserves of the world would have been consumed. After the peak oil the production of the oil should decrease and the prices of the oil should rise steeply.
Since the oil prices have risen very steeply in recent times and have broken all records and crossed the $100 per barrel mark for crude oil prices, many peak oil proponents argue that peak oil has arrived and if the consumption of oil is not controlled the reserves will not last longer than five years.
In 1974 Marion King Hubbert, a geo-scientist at the Shell research lab, predicted that peak oil would be in 1995 at about 12 Gbbl (gigabarrels) per year. Since then there have been many changes both in the consumption pattern and production rate and estimate of the oil reserves. Oil production rate has more than doubled and still the peak didn't arrive because of increase in the estimated global reserves of oil during this period.
ASPO (Association for the Study of Peak Oil and Gas), an informal network of scientists interested in determining the peak oil and its impact, predicted that global production of oil peaked in 2004 at about 23 Gbbls. However, in 2005, ASPO revised its prediction for the peak oil to the year 2010 taking into account both conventional and non-conventional sources of oil.
The opponents of the peak oil argue that the steep rise in prices of oil in 2004 was not alone and it was a trend observed in all major commodities. Moreover the increase in prices of oil is dependent on the political situation and some temporary supply side constraints. They argue that the estimation of the oil reserves have been increasing as is the oil production. Hence despite of increase in production the peak oil situation is far from us.
Nov 22, 2007
Oil price struggles to touch $100
Oil prices are closing in towards the triple digit figure of $100 per barrel. The $100 is a very strong psychological barrier and the prices may move swiftly in either direction once this level is crossed.
The US light crude hit an all time high of $99.29 per barrel on Tuesday. This was in anticipation of the reduction in inventory level in Wednesday’s announcement. Also, there was fire at two US refineries.
The oil prices have risen by more than 40% this year from $61/barrel. Much of this increase can be attributed to the weakening dollar and concerns for supply of oil. Markets are adjusting for the future risks of US attacking Iran.
High oil prices are having an adverse impact on Asian economies importing oil.
King Abdullah of Saudi Arabia said "Oil is energy for building and prosperity, it shouldn't become a means of conflict". Saudi Arabia is the biggest oil producer in the Organisation of the Petroleum Exporting Countries (OPEC). OPEC has a share of more than 40% in oil exports.
The US light crude hit an all time high of $99.29 per barrel on Tuesday. This was in anticipation of the reduction in inventory level in Wednesday’s announcement. Also, there was fire at two US refineries.
The oil prices have risen by more than 40% this year from $61/barrel. Much of this increase can be attributed to the weakening dollar and concerns for supply of oil. Markets are adjusting for the future risks of US attacking Iran.
High oil prices are having an adverse impact on Asian economies importing oil.
King Abdullah of Saudi Arabia said "Oil is energy for building and prosperity, it shouldn't become a means of conflict". Saudi Arabia is the biggest oil producer in the Organisation of the Petroleum Exporting Countries (OPEC). OPEC has a share of more than 40% in oil exports.
Nov 6, 2007
Oil may cross $100 per barrel by December
Crude oil prices scaled another height and crossed $97 per barrel in trade at NYMEX. In addition to factors discussed earlier, the rise can be attributed to the supply side concerns owing to the bombing in Afghanistan and attack on a Yemen oil pipeline. Moreover US government's prediction of fall in inventory level and increased oil consumption added to the supply worries. Meanwhile the demand is remaining high ensuring the trend of oil prices intact.
Gold price hit 28 year high
Spot gold today hit a high of $814.10 an ounce and closed above $800 levels. This overtook the previous high price of January 1980. Gold and Oil prices are surging since the sub-prime woes are affecting the stock markets and metals are seen as a safe place for investment. Yesterday Citigroup announced that it could have to write-down about $11 billion due to bad mortgage.
The record high for gold in Nymex is $875 set on January 21, 1980.
Some causes behind the current spike in gold prices are:
In 1990 gold prices soared because:
Though inflation adjusted price of gold is nowhere near the highs reached in 1980s still the trend seems to be intact upwards and may very soon cross the all-time nominal high price.
The record high for gold in Nymex is $875 set on January 21, 1980.
Some causes behind the current spike in gold prices are:
- Low interest rate (Fed cut the rates last week to 4.5%)
- Sub-prime crisis creating uncertainty in stock markets
- Dollar is weak against other currencies
- Crude oil is at all time high
- Turkey-Kurdish conflict
- Supply concerns due to union's problem in South Africa after several deaths in mines.
In 1990 gold prices soared because:
- Iranian revolution (1979)
- Russia's intervention in Afghanistan
- Strong oil prices
- High inflation
Though inflation adjusted price of gold is nowhere near the highs reached in 1980s still the trend seems to be intact upwards and may very soon cross the all-time nominal high price.
Nov 5, 2007
Oil prices: what will Dr. Manmohan Singh do?
Oil prices have been increasing and has reached $96 per barrel in international market. So, it is for prime Minister Dr. Manmohan Singh to decide on whether or not to increase the oil prices. Congress does not want to increase the prices due to coming elections in gujrat and himachal pradesh. But, it has to take an action as loss of oil marketing companies is rising as told by Murli Deora, petroleum and natural gas minister.
The options that government at present has is to sell more oil bonds, cut the excise duties on petrol and diesel or cut the custom duty on crude. Petroleum ministry is pressing to cut excise duties by 2 Rs on petrol and 1 Rs on diesel.
The options that government at present has is to sell more oil bonds, cut the excise duties on petrol and diesel or cut the custom duty on crude. Petroleum ministry is pressing to cut excise duties by 2 Rs on petrol and 1 Rs on diesel.
Oct 30, 2007
Crude oil price scales new heights
Crude oil price crossed $93 (€64) a barrel in New York.
In London, Brent Crude hit an all-time high of $90 a barrel.
In October the price has risen by more than 16%.
In the year 2007 it has increased by more than 50%.
The current price of crude oil is an all time high in nominal dollars. However inflation adjustments make it slightly below the peak touched of $101.7 in April 1980 (Iran cut the exports).
The trend for the crude oil price is shown below:
Reasons for sharp rise:
Mexico shut one-fifth of its production due to bad weather in Gulf of Mexico.
OPEC is not increasing production to compensate for the reduced supply.
Peak demand period because of northern hemisphere winter season.
Tensions between Turkey and Iraq over Kurdish militants.
U.S. sanctions over Iran's nuclear program.
Dollar has touched a record low.
Oil futures are being used as hedge against the weakening dollar.
In London, Brent Crude hit an all-time high of $90 a barrel.
In October the price has risen by more than 16%.
In the year 2007 it has increased by more than 50%.
The current price of crude oil is an all time high in nominal dollars. However inflation adjustments make it slightly below the peak touched of $101.7 in April 1980 (Iran cut the exports).
The trend for the crude oil price is shown below:
Reasons for sharp rise:
Mexico shut one-fifth of its production due to bad weather in Gulf of Mexico.
OPEC is not increasing production to compensate for the reduced supply.
Peak demand period because of northern hemisphere winter season.
Tensions between Turkey and Iraq over Kurdish militants.
U.S. sanctions over Iran's nuclear program.
Dollar has touched a record low.
Oil futures are being used as hedge against the weakening dollar.
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