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 $75/bbl over the next few years.
I do, however, believe it is beyond the ability of men to predict the exact shape of the swing cycle, in terms of the period and cycle frequency.
Source: The Jakarta Post
_________________
The writer has been working in the oil and gas business for about 30 years.
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Monday, 30 March 15
WORST IS OVER FOR THE DRY BULK MARKET, BUT THE PAIN WILL REMAIN FOR YEARS TO COME, SAYS BIMCO CHIEF ANALYST - HELLENIC SHIPPING
The current demise of the dry bulk market isn’t one to go away anytime soon. That doesn’t mean that it can’t improve, with all sh ...
Monday, 30 March 15
Q3' 15 CFR SOUTH CHINA COAL SWAP: DECLINED 8.7% M-M; 12.77% Y-TO-D
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery declined US$ 5.00 (-8.70%) per MT month over month and US$ 1.33 (-2 ...
Monday, 30 March 15
Q2' FOB NEWCASTLE COAL SWAP CLOSED 4.47% HIGHER THAN Q4' CLOSING PRICE
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery declined US$ 5.42 per MT (-10.43%) month over month and US$ 1.60 (-3.32%) w ...
Sunday, 29 March 15
INDO - INDIA: SUPRAMAX & PANAMAX FREIGHT MARKET STEADY
COALspot.com: The freight market was almost stable as all segments slightly up except Panamax sector.
The BDI was up by just 0.85% week over w ...
Saturday, 28 March 15
IS NORTHERN EUROPE THE NEW MINING ELDORADO?
The Europe Mining 2015 Summit, organised by Global Summits organizer IRN on 17-18 June in Amsterdam, The Netherlands, will gather senior level repr ...
|
|
|
Showing 3101 to 3105 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Mintek Dendrill Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kumho Petrochemical, South Korea
- Coalindo Energy - Indonesia
- Savvy Resources Ltd - HongKong
- IEA Clean Coal Centre - UK
- Attock Cement Pakistan Limited
- Electricity Generating Authority of Thailand
- Meenaskhi Energy Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Australian Commodity Traders Exchange
- Ministry of Mines - Canada
- Chettinad Cement Corporation Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Central Electricity Authority - India
- Posco Energy - South Korea
- Australian Coal Association
- Aditya Birla Group - India
- McConnell Dowell - Australia
- Maheswari Brothers Coal Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Marubeni Corporation - India
- Sical Logistics Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Star Paper Mills Limited - India
- TeaM Sual Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Manunggal Multi Energi - Indonesia
- MS Steel International - UAE
- Singapore Mercantile Exchange
- CIMB Investment Bank - Malaysia
- Bayan Resources Tbk. - Indonesia
- Medco Energi Mining Internasional
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Makarim & Taira - Indonesia
- Kartika Selabumi Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Cement Manufacturers Association - India
- The University of Queensland
- PowerSource Philippines DevCo
- Bhatia International Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pendopo Energi Batubara - Indonesia
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
- Lanco Infratech Ltd - India
- Bhushan Steel Limited - India
- Straits Asia Resources Limited - Singapore
- Eastern Coal Council - USA
- Bharathi Cement Corporation - India
- Kepco SPC Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Maharashtra Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- Sakthi Sugars Limited - India
- Global Green Power PLC Corporation, Philippines
- Vizag Seaport Private Limited - India
- Siam City Cement PLC, Thailand
- Parliament of New Zealand
- Larsen & Toubro Limited - India
- Indogreen Group - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- ASAPP Information Group - India
- South Luzon Thermal Energy Corporation
- Global Coal Blending Company Limited - Australia
- Intertek Mineral Services - Indonesia
- Agrawal Coal Company - India
- Africa Commodities Group - South Africa
- Wilmar Investment Holdings
- Meralco Power Generation, Philippines
- Altura Mining Limited, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Anglo American - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Heidelberg Cement - Germany
- Sojitz Corporation - Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Riau Bara Harum - Indonesia
- Banpu Public Company Limited - Thailand
- Kobexindo Tractors - Indoneisa
- Energy Link Ltd, New Zealand
- Power Finance Corporation Ltd., India
- Global Business Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Planning Commission, India
- Kalimantan Lumbung Energi - Indonesia
- Coal and Oil Company - UAE
- Xindia Steels Limited - India
- Interocean Group of Companies - India
- Borneo Indobara - Indonesia
- Standard Chartered Bank - UAE
- The State Trading Corporation of India Ltd
- Barasentosa Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Gujarat Sidhee Cement - India
- Bulk Trading Sa - Switzerland
- PTC India Limited - India
- New Zealand Coal & Carbon
- Chamber of Mines of South Africa
- Malabar Cements Ltd - India
- White Energy Company Limited
- Jindal Steel & Power Ltd - India
- Minerals Council of Australia
- ICICI Bank Limited - India
- Kaltim Prima Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Aboitiz Power Corporation - Philippines
- Tata Chemicals Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dalmia Cement Bharat India
- Wood Mackenzie - Singapore
- Videocon Industries ltd - India
- India Bulls Power Limited - India
- Uttam Galva Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- Trasteel International SA, Italy
- Latin American Coal - Colombia
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- Jaiprakash Power Ventures ltd
- Neyveli Lignite Corporation Ltd, - India
- Ambuja Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Independent Power Producers Association of India
- Toyota Tsusho Corporation, Japan
- Economic Council, Georgia
- Thai Mozambique Logistica
- Pipit Mutiara Jaya. PT, Indonesia
- Vedanta Resources Plc - India
- Mercator Lines Limited - India
- Romanian Commodities Exchange
- Renaissance Capital - South Africa
- Salva Resources Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Port Waratah Coal Services - Australia
- Commonwealth Bank - Australia
- GVK Power & Infra Limited - India
- Deloitte Consulting - India
- Carbofer General Trading SA - India
- GMR Energy Limited - India
- Globalindo Alam Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Sree Jayajothi Cements Limited - India
- Mjunction Services Limited - India
- Binh Thuan Hamico - Vietnam
- Grasim Industreis Ltd - India
- Oldendorff Carriers - Singapore
- LBH Netherlands Bv - Netherlands
- Central Java Power - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- Mercuria Energy - Indonesia
- SMG Consultants - Indonesia
- Tamil Nadu electricity Board
- Holcim Trading Pte Ltd - Singapore
- Goldman Sachs - Singapore
- VISA Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Kideco Jaya Agung - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Metalloyd Limited - United Kingdom
- The Treasury - Australian Government
- Bangladesh Power Developement Board
- IHS Mccloskey Coal Group - USA
- Indika Energy - Indonesia
- Thiess Contractors Indonesia
- Bukit Makmur.PT - Indonesia
- Rio Tinto Coal - Australia
- Simpson Spence & Young - Indonesia
- PNOC Exploration Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining and Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Leighton Contractors Pty Ltd - Australia
- Parry Sugars Refinery, India
- Orica Mining Services - Indonesia
- San Jose City I Power Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Sindya Power Generating Company Private Ltd
- Ministry of Finance - Indonesia
- SMC Global Power, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Siam City Cement - Thailand
- Formosa Plastics Group - Taiwan
- Price Waterhouse Coopers - Russia
- Georgia Ports Authority, United States
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Australia Pty. Ltd.
- CNBM International Corporation - China
- Eastern Energy - Thailand
- Karaikal Port Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Ministry of Transport, Egypt
- Alfred C Toepfer International GmbH - Germany
- Edison Trading Spa - Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Madhucon Powers Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- Energy Development Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Indo Tambangraya Megah - Indonesia
- London Commodity Brokers - England
- Indonesian Coal Mining Association
- Petron Corporation, Philippines
|
| |
| |
|
