We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Tuesday, 10 March 15
OIL PRICE FORECASTING - IGNORE THE EXPERTS: COLIN MARSHALL
 KNOWLEDGE TO ELEVATE
Experts put themselves on a pedestal, making claims to have special forecasting abilities for oil price trends. They, too, one way or another, charge for making those claims. Because of this, they deserve to be investigated. And, depending on the outcome of the investigation, they may also be deserving of ridicule.So, what is driving the oil price today? Many commentators have noted that today, there are a number of hypotheses, phenomena and factors all contributing to the vagaries of the oil price:
Rising shale hydrocarbon supply. Shale oil and gas ramping up, as producers have recognized that shale production is more prolific than expected. Furthermore, the certainty of shale hydrocarbon production has proved attractive (compared with normal exploration), following more of a “production line” model, where every dollar injected delivers a reasonably certain production.
Worldwide oil demand is dropping and not just in China. Efficiencies are resulting in reduced demand. Winters are generally milder. Slowly but surely, global users are switching to gas and dropping the price as technology improves and economies of scale kick in.
Cars create about 60 percent of the demand for oil, and the introduction of gas-powered and electric vehicles is increasing. Solar power is also increasing and could become a material alternative energy source in the medium term.
The Middle East is unstable. The potential for severe supply disruption from war, political (“Arab Spring”) uprisings or even sanctions adds tension and uncertainty into the already precarious supply and demand balancing acts. Erratic production from war-torn countries like Iraq and Libya often surprise the market with actual supply far different from predictions.
The Islamic State (IS) scares analysts as well. The market is easily spooked by terrorism, notably IS, who frightens even al-Qaeda. This threat of terrorist activities tends to keep prices high or at least volatile.
Prices need to support budgets. Many countries rely heavily on oil and gas revenues to support their national budgets.
In other words, once prices drop, their pain may force them to cut production themselves if they are Organization of Petroleum Exporting Countries (OPEC) members, or at least put significant pressure on swing producers to reduce production to increase prices.
Saudi believes in supply and demand. Saudi Arabia, and hence OPEC, has maintained a firm stance not to cut production to maintain prices, as they believe that any reduction would probably not increase oil prices, as the shale producers would simply fill the gap.
By allowing oil prices to fall, Saudi hopes the shale producers will reduce production, and not make material shale-related infrastructure capital commitments.
Supply will drop, prices rise, allowing OPEC to maintain their market share, at higher prices, in the future.
Saudi doesn’t believe in supply and demand — it’s all geo-politics. Saudi wants to see the end of the current Syrian regime, as does Qatar, as Syria blocks their access to European gas.
Despite this anti-Syria alignment, Qatar allegedly supports IS as a catalyst to topple Syria whereas Saudi chooses to allow oil prices to free-fall, to put pressure on Russia to stop supporting Syria, a position the US allegedly supports.
Putin is unlikely to capitulate as giving central Europe an alternative gas supply to mother Russia may bring even more pain than low oil prices.
Reduced costs will mitigate the lower prices. Some ambivalence toward low prices, especially by the majors, comes from the fact that costs are expected to eventually drop as inefficiencies (“fat”) are taken out of various components of the energy value chain.
In other words, providing one has the resources to endure the period until costs “catch-up” and reduce sufficiently, producers should eventually see a return to the profits they were previously receiving, even in a low oil-price environment.
Work programs are committed. Some companies have work commitments that cannot be immediately adjusted as a result of oil price changes.
Hedges give some short-term protection. Some companies will have taken out oil price hedges and this will have protected them from low oil prices, disincentivizing them to reduce production — but these hedges will drop off soon.
Two primary observations develop from this long list: first, there are a lot of points, perhaps suggesting that we really cannot expect to make a sensible prediction.
Second, there are arguments on both the supply and demand side, making anyone who tediously repeats the platitude about “the oil price being simply about supply and demand” appears somewhat simple-minded.
Whilst people may believe that their (or others) actions affect or manipulate the oil price, the reality may be that the consequences of those actions are of minor importance only.
The low oil price fluctuations are possibly due to unimagined and unfathomable factors, or complex combinations of factors.
The bottom line is that the world is much more complex these days and this makes the oil price difficult to predict. Even the fact that most commentators today believe that the oil price will stay low for at least a year or so should be taken with a grain of salt — nobody really knows.
A single war or major terrorist action could have catastrophic consequences on oil prices.
So what will happen to the oil price? As one with no pretensions of having knowledge, I predict oil price will swing in a US$50-100/per barrel range for the next few years or so, then gradually rise as population, education, prosperity and demand continues to rise, but still swinging in a fairly large range.
This $50-100/bbl range is justified as follows: Putting aside all the excuses for not being able to make predictions, including the obfuscating geopolitical conspiracy theories, it appears that a major factor is the addition of large quantities of shale hydrocarbons on the market, accessible as a result of new technology.
As oil prices increased an alternative has appeared, today in the form of shale hydrocarbons.
Shale oil is believed to cost around $85/bbl to produce — and a well’s production declines rapidly, falling by about 60 percent in the first year alone. In other words, shale hydrocarbons need new, expensive wells continuously to maintain production — below $85/bbl this will not happen and supply will reduce as wells are not drilled, increasing demand.
Recognizing that price does not rebound immediately, that there is a lag or elasticity to the price, prices may drop to a natural floor of around $50, by which point under most circumstances demand will send the price north once again.
The longer oil is “low”, then the more quickly it will swing back and likely over-shoot the $85/bbl ceiling, perhaps up to around $100/bbl, before inevitably descending once again.
Hence I believe the price will be around $50-100, the period and magnitude of the changes primarily in response to the ongoing geopolitical parlor games.
Some may accuse me of protecting myself by suggesting such a large range, but in fact I am specifically predicting there will be fluctuations in that bandwidth, with an average price around $75/bbl over the next few years.
I do, however, believe it is beyond the ability of men to predict the exact shape of the swing cycle, in terms of the period and cycle frequency.
Source: The Jakarta Post
_________________
The writer has been working in the oil and gas business for about 30 years.
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Tuesday, 10 March 15
FOB NEWCASTLE COAL SWAPS HEADING SOUTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery declined US$ 0.24 per MT (-0.47%) month over month and US$ 1.52 (-2.93%) we ...
Tuesday, 10 March 15
CFR SOUTH CHINA POWER-STATION COAL SWAPS DECLINE
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery fell US$ 0.42 (-0.74%) per MT month over month and declined US$ 1.00 &nbs ...
Monday, 09 March 15
INDONESIA GREETS INDIA RATE CUT AS GOOD FOR EXPORTS - GLOBEASIA
Indonesian commodity producers and economists have hailed the Indian central bank’s rate cut as good for boosting exports from Southeast Asia ...
Monday, 09 March 15
CHINA'S SUPREME COURT ISSUES NEW JUDICIAL INTERPRETATION ON SHIP ARREST AND JUDICIAL SALE OF SHIPS - GARD
KNOWLEDGE TO ELEVATE
China is not traditionally a popular jurisdiction for ship arrest. However, Members and clients with ships calling at por ...
Monday, 09 March 15
CHINA'S IMPORTS - NEVER MORE IMPORTANT TO SHIPPING? - CLARKSONS
Over the last 15 years China has led maritime forecasters a right old dance. In 2002, rumours that Chinese iron ore imports were about to take off ...
|
|
|
Showing 3151 to 3155 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Mercator Lines Limited - India
- Ministry of Finance - Indonesia
- Bukit Baiduri Energy - Indonesia
- Vedanta Resources Plc - India
- Indian Oil Corporation Limited
- Borneo Indobara - Indonesia
- Kaltim Prima Coal - Indonesia
- GMR Energy Limited - India
- Malabar Cements Ltd - India
- The State Trading Corporation of India Ltd
- Indika Energy - Indonesia
- Sical Logistics Limited - India
- Coastal Gujarat Power Limited - India
- Independent Power Producers Association of India
- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Ind-Barath Power Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Electricity Authority, New Zealand
- Directorate Of Revenue Intelligence - India
- SMC Global Power, Philippines
- Parliament of New Zealand
- Manunggal Multi Energi - Indonesia
- Salva Resources Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Riau Bara Harum - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Eastern Energy - Thailand
- Marubeni Corporation - India
- Indogreen Group - Indonesia
- Heidelberg Cement - Germany
- Power Finance Corporation Ltd., India
- Lanco Infratech Ltd - India
- Tamil Nadu electricity Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- IHS Mccloskey Coal Group - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Toyota Tsusho Corporation, Japan
- Therma Luzon, Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Kepco SPC Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Banpu Public Company Limited - Thailand
- European Bulk Services B.V. - Netherlands
- Xindia Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Maheswari Brothers Coal Limited - India
- CNBM International Corporation - China
- Maharashtra Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Commonwealth Bank - Australia
- Sindya Power Generating Company Private Ltd
- Mjunction Services Limited - India
- Edison Trading Spa - Italy
- Global Coal Blending Company Limited - Australia
- Kapuas Tunggal Persada - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Business Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Merrill Lynch Commodities Europe
- Port Waratah Coal Services - Australia
- South Luzon Thermal Energy Corporation
- Petron Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Energy Exchange, India
- Parry Sugars Refinery, India
- ICICI Bank Limited - India
- Altura Mining Limited, Indonesia
- Minerals Council of Australia
- Aditya Birla Group - India
- New Zealand Coal & Carbon
- Savvy Resources Ltd - HongKong
- Kumho Petrochemical, South Korea
- Sakthi Sugars Limited - India
- Energy Development Corp, Philippines
- Trasteel International SA, Italy
- Singapore Mercantile Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Electricity Authority - India
- Coal and Oil Company - UAE
- Chamber of Mines of South Africa
- Cement Manufacturers Association - India
- Gujarat Sidhee Cement - India
- TNB Fuel Sdn Bhd - Malaysia
- Globalindo Alam Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- PowerSource Philippines DevCo
- McConnell Dowell - Australia
- Eastern Coal Council - USA
- Iligan Light & Power Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Chettinad Cement Corporation Ltd - India
- Sarangani Energy Corporation, Philippines
- Medco Energi Mining Internasional
- Orica Australia Pty. Ltd.
- TeaM Sual Corporation - Philippines
- IEA Clean Coal Centre - UK
- PetroVietnam Power Coal Import and Supply Company
- Krishnapatnam Port Company Ltd. - India
- Goldman Sachs - Singapore
- GVK Power & Infra Limited - India
- Uttam Galva Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Miang Besar Coal Terminal - Indonesia
- Dalmia Cement Bharat India
- PNOC Exploration Corporation - Philippines
- Georgia Ports Authority, United States
- San Jose City I Power Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Jaiprakash Power Ventures ltd
- LBH Netherlands Bv - Netherlands
- Ambuja Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Attock Cement Pakistan Limited
- Standard Chartered Bank - UAE
- Essar Steel Hazira Ltd - India
- Samtan Co., Ltd - South Korea
- International Coal Ventures Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Economic Council, Georgia
- Star Paper Mills Limited - India
- Africa Commodities Group - South Africa
- Simpson Spence & Young - Indonesia
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- Cigading International Bulk Terminal - Indonesia
- CIMB Investment Bank - Malaysia
- Videocon Industries ltd - India
- Barasentosa Lestari - Indonesia
- Bhushan Steel Limited - India
- Energy Link Ltd, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Grasim Industreis Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Romanian Commodities Exchange
- GAC Shipping (India) Pvt Ltd
- Wood Mackenzie - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Madhucon Powers Ltd - India
- Latin American Coal - Colombia
- Gujarat Mineral Development Corp Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Electricity Generating Authority of Thailand
- Mercuria Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- Mintek Dendrill Indonesia
- Planning Commission, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kideco Jaya Agung - Indonesia
- SMG Consultants - Indonesia
- Baramulti Group, Indonesia
- Global Green Power PLC Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Sojitz Corporation - Japan
- Intertek Mineral Services - Indonesia
- Jindal Steel & Power Ltd - India
- Ministry of Transport, Egypt
- London Commodity Brokers - England
- Rio Tinto Coal - Australia
- Binh Thuan Hamico - Vietnam
- Tata Chemicals Ltd - India
- Carbofer General Trading SA - India
- Oldendorff Carriers - Singapore
- Formosa Plastics Group - Taiwan
- Bulk Trading Sa - Switzerland
- Petrochimia International Co. Ltd.- Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Coalindo Energy - Indonesia
- Ministry of Mines - Canada
- Deloitte Consulting - India
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- MS Steel International - UAE
- Vizag Seaport Private Limited - India
- Antam Resourcindo - Indonesia
- Thiess Contractors Indonesia
- Orica Mining Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Bharathi Cement Corporation - India
- Agrawal Coal Company - India
- Posco Energy - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Kartika Selabumi Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- Central Java Power - Indonesia
- PTC India Limited - India
- Australian Commodity Traders Exchange
- Interocean Group of Companies - India
- The University of Queensland
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement - Thailand
- VISA Power Limited - India
- Bhatia International Limited - India
- Makarim & Taira - Indonesia
- Semirara Mining Corp, Philippines
- Renaissance Capital - South Africa
- Meralco Power Generation, Philippines
- Indonesian Coal Mining Association
- Price Waterhouse Coopers - Russia
- The Treasury - Australian Government
- ASAPP Information Group - India
- White Energy Company Limited
- Australian Coal Association
- Thai Mozambique Logistica
- India Bulls Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Timah Investasi Mineral - Indoneisa
- Larsen & Toubro Limited - India
|
| |
| |
|
