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, 14 November 23
CHINA'S BELT AND ROAD INITIATIVE TURNS AWAY FROM COAL - WOOD MACKENZIE
Ambitious, contentious and big spending, China’s Belt and Road Initiative (BRI) is 10 years old. In that time, China has splashed more than U ...
Friday, 10 November 23
THE COMMODITIES FEED: OIL UNDER PRESSURE - ING
Energy – Brent plummets
The oil market came under significant pressure yesterday. ICE Brent settled 4.19% lower on the day and ...
Friday, 10 November 23
COAL USE AT U.S. POWER PLANTS CONTINUES DOWNWARD SPIRAL; FULL IMPACT ON MINES TO BE FELT IN 2024 - IEEFA
This year, the use of coal by the U.S.’s power producers has been so anemic that the fuel has not achieved a 20% market share in any month so ...
Friday, 10 November 23
INDIA: NATIONAL COAL INDEX RISES 3.83 POINTS IN SEPTEMBER AMID HIGHER DEMAND - LIVEMINT
The National Coal Index (NCI) rose 3.83 points to 143.91 in September amid growing demand for coal.
The union coal ministry on Tuesd ...
Thursday, 09 November 23
WE'RE PRODUCING TOO MUCH COAL, OIL AND GAS, REPORT SAYS - WSJ
World leaders pledged in 2015 to reduce emissions in a combined effort to limit climate change.
Now they are stepping up production ...
|
|
|
Showing 76 to 80 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Offshore Bulk Terminal Pte Ltd, Singapore
- Neyveli Lignite Corporation Ltd, - India
- Samtan Co., Ltd - South Korea
- Rio Tinto Coal - Australia
- Simpson Spence & Young - Indonesia
- MS Steel International - UAE
- Mercator Lines Limited - India
- Electricity Generating Authority of Thailand
- Edison Trading Spa - Italy
- Makarim & Taira - Indonesia
- Georgia Ports Authority, United States
- Orica Mining Services - Indonesia
- Eastern Energy - Thailand
- Sakthi Sugars Limited - India
- Malabar Cements Ltd - India
- New Zealand Coal & Carbon
- White Energy Company Limited
- Tamil Nadu electricity Board
- Indo Tambangraya Megah - Indonesia
- Vedanta Resources Plc - India
- Indian Oil Corporation Limited
- Sinarmas Energy and Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Binh Thuan Hamico - Vietnam
- Heidelberg Cement - Germany
- Ministry of Transport, Egypt
- Kumho Petrochemical, South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Grasim Industreis Ltd - India
- Essar Steel Hazira Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Straits Asia Resources Limited - Singapore
- Videocon Industries ltd - India
- Indogreen Group - Indonesia
- Toyota Tsusho Corporation, Japan
- Leighton Contractors Pty Ltd - Australia
- Latin American Coal - Colombia
- Maharashtra Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Cigading International Bulk Terminal - Indonesia
- Economic Council, Georgia
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining Corp, Philippines
- Ministry of Finance - Indonesia
- PowerSource Philippines DevCo
- Kohat Cement Company Ltd. - Pakistan
- Interocean Group of Companies - India
- Dalmia Cement Bharat India
- CNBM International Corporation - China
- India Bulls Power Limited - India
- Electricity Authority, New Zealand
- Xindia Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- ICICI Bank Limited - India
- Barasentosa Lestari - Indonesia
- Thai Mozambique Logistica
- Singapore Mercantile Exchange
- Planning Commission, India
- Altura Mining Limited, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Coal Blending Company Limited - Australia
- GVK Power & Infra Limited - India
- Central Electricity Authority - India
- Pipit Mutiara Jaya. PT, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Bharathi Cement Corporation - India
- Attock Cement Pakistan Limited
- Madhucon Powers Ltd - India
- McConnell Dowell - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- CIMB Investment Bank - Malaysia
- Bukit Baiduri Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Kartika Selabumi Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Aboitiz Power Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Krishnapatnam Port Company Ltd. - India
- Sree Jayajothi Cements Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- ASAPP Information Group - India
- Siam City Cement PLC, Thailand
- Billiton Holdings Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- Ambuja Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Central Java Power - Indonesia
- OPG Power Generation Pvt Ltd - India
- PTC India Limited - India
- San Jose City I Power Corp, Philippines
- Riau Bara Harum - Indonesia
- Uttam Galva Steels Limited - India
- Mintek Dendrill Indonesia
- Timah Investasi Mineral - Indoneisa
- VISA Power Limited - India
- Oldendorff Carriers - Singapore
- Wood Mackenzie - Singapore
- Kalimantan Lumbung Energi - Indonesia
- GMR Energy Limited - India
- Karaikal Port Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Marubeni Corporation - India
- Bulk Trading Sa - Switzerland
- Coalindo Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Posco Energy - South Korea
- European Bulk Services B.V. - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Medco Energi Mining Internasional
- Miang Besar Coal Terminal - Indonesia
- Mercuria Energy - Indonesia
- Wilmar Investment Holdings
- Australian Commodity Traders Exchange
- Carbofer General Trading SA - India
- Savvy Resources Ltd - HongKong
- Bukit Makmur.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Agrawal Coal Company - India
- Chamber of Mines of South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cement Manufacturers Association - India
- Energy Link Ltd, New Zealand
- Power Finance Corporation Ltd., India
- International Coal Ventures Pvt Ltd - India
- Sojitz Corporation - Japan
- Asmin Koalindo Tuhup - Indonesia
- Thiess Contractors Indonesia
- Merrill Lynch Commodities Europe
- Siam City Cement - Thailand
- Energy Development Corp, Philippines
- Australian Coal Association
- Bhushan Steel Limited - India
- Lanco Infratech Ltd - India
- Formosa Plastics Group - Taiwan
- Manunggal Multi Energi - Indonesia
- Global Business Power Corporation, Philippines
- Mjunction Services Limited - India
- The University of Queensland
- Port Waratah Coal Services - Australia
- Kideco Jaya Agung - Indonesia
- Maheswari Brothers Coal Limited - India
- Indika Energy - Indonesia
- Bhatia International Limited - India
- Renaissance Capital - South Africa
- London Commodity Brokers - England
- Orica Australia Pty. Ltd.
- Eastern Coal Council - USA
- SMG Consultants - Indonesia
- Trasteel International SA, Italy
- AsiaOL BioFuels Corp., Philippines
- Anglo American - United Kingdom
- Indian Energy Exchange, India
- SN Aboitiz Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Gujarat Sidhee Cement - India
- Bhoruka Overseas - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Deloitte Consulting - India
- Tata Chemicals Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Metalloyd Limited - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Sical Logistics Limited - India
- Baramulti Group, Indonesia
- Star Paper Mills Limited - India
- Jindal Steel & Power Ltd - India
- IEA Clean Coal Centre - UK
- Meralco Power Generation, Philippines
- IHS Mccloskey Coal Group - USA
- Indonesian Coal Mining Association
- SMC Global Power, Philippines
- Commonwealth Bank - Australia
- Goldman Sachs - Singapore
- Romanian Commodities Exchange
- Petron Corporation, Philippines
- Africa Commodities Group - South Africa
- South Luzon Thermal Energy Corporation
- Kobexindo Tractors - Indoneisa
- Vizag Seaport Private Limited - India
- Aditya Birla Group - India
- Bayan Resources Tbk. - Indonesia
- Meenaskhi Energy Private Limited - India
- Larsen & Toubro Limited - India
- Gujarat Electricity Regulatory Commission - India
- Parry Sugars Refinery, India
- PNOC Exploration Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Mines - Canada
- Intertek Mineral Services - Indonesia
- The State Trading Corporation of India Ltd
- Price Waterhouse Coopers - Russia
- Independent Power Producers Association of India
- The Treasury - Australian Government
- Parliament of New Zealand
- Global Green Power PLC Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Standard Chartered Bank - UAE
- Semirara Mining and Power Corporation, Philippines
- Bangladesh Power Developement Board
- Antam Resourcindo - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Borneo Indobara - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- TeaM Sual Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Minerals Council of Australia
- Coal and Oil Company - UAE
- Rashtriya Ispat Nigam Limited - India
|
| |
| |
|
