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.
|
|
Thursday, 19 March 15
HANDY: INDO COAL CARGOS DESTINED FOR INDIA BEING FIXED IN REGION OF $ 7-8K - FEARNLEYS
Handy
The Handy and Supra market has had a week with mixed signals. Although we see more activity in both hemispheres the rates are only up about ...
Thursday, 19 March 15
INDONESIAN COAL BENCHMARK SOAR 7.69% IN MARCH....!!!
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised up Indonesian coal benchmark prices to US$ 67.76 per MT in March ...
Wednesday, 18 March 15
AVERAGE RATE FOR CAPES MOVED TO BELOW $ 4K/DAY LAST WEEK - INTERMODAL
COALspot.com: The even heavier losses noted in the Capesize segment last week, denied the Dry Bulk market a third weekly positive, while the smalle ...
Wednesday, 18 March 15
PARKING THE CAPES - LINOS KOGEVINAS
It is no secret that recent times have been anything but kind towards shipping, and no sector has suffered more lately than the dry bulk one. While ...
Wednesday, 18 March 15
CHINA-OWNED SHIPS: A RAPID RISE TO BECOME ONE OF THE WORLD'S LARGEST FLEETS - RICHARD SCOTT
Ships operated by owners based in China have become increasingly prominent on the world’s sea routes. China-owned container ships, bulk carri ...
|
|
|
Showing 3126 to 3130 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- McConnell Dowell - Australia
- Sree Jayajothi Cements Limited - India
- AsiaOL BioFuels Corp., Philippines
- Georgia Ports Authority, United States
- Timah Investasi Mineral - Indoneisa
- Xindia Steels Limited - India
- Price Waterhouse Coopers - Russia
- Mjunction Services Limited - India
- Bangladesh Power Developement Board
- Petrochimia International Co. Ltd.- Taiwan
- Commonwealth Bank - Australia
- International Coal Ventures Pvt Ltd - India
- Larsen & Toubro Limited - India
- Orica Mining Services - Indonesia
- Simpson Spence & Young - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Malabar Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Billiton Holdings Pty Ltd - Australia
- GMR Energy Limited - India
- IEA Clean Coal Centre - UK
- Coalindo Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Thiess Contractors Indonesia
- Straits Asia Resources Limited - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Tata Chemicals Ltd - India
- San Jose City I Power Corp, Philippines
- Indika Energy - Indonesia
- ICICI Bank Limited - India
- Petron Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Oldendorff Carriers - Singapore
- Intertek Mineral Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Port Waratah Coal Services - Australia
- Coal and Oil Company - UAE
- Energy Link Ltd, New Zealand
- Ministry of Transport, Egypt
- Uttam Galva Steels Limited - India
- Makarim & Taira - Indonesia
- Merrill Lynch Commodities Europe
- Lanco Infratech Ltd - India
- Vedanta Resources Plc - India
- PowerSource Philippines DevCo
- Ambuja Cements Ltd - India
- White Energy Company Limited
- Jindal Steel & Power Ltd - India
- The State Trading Corporation of India Ltd
- Manunggal Multi Energi - Indonesia
- Singapore Mercantile Exchange
- Tamil Nadu electricity Board
- Central Java Power - Indonesia
- Parry Sugars Refinery, India
- Baramulti Group, Indonesia
- Energy Development Corp, Philippines
- Electricity Authority, New Zealand
- PNOC Exploration Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Chamber of Mines of South Africa
- Ministry of Mines - Canada
- Indian Oil Corporation Limited
- Bhoruka Overseas - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- MS Steel International - UAE
- Kartika Selabumi Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- Wood Mackenzie - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Renaissance Capital - South Africa
- London Commodity Brokers - England
- Madhucon Powers Ltd - India
- Independent Power Producers Association of India
- Global Coal Blending Company Limited - Australia
- Riau Bara Harum - Indonesia
- Sinarmas Energy and Mining - Indonesia
- ASAPP Information Group - India
- CNBM International Corporation - China
- GAC Shipping (India) Pvt Ltd
- Globalindo Alam Lestari - Indonesia
- Mercuria Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Barasentosa Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Coastal Gujarat Power Limited - India
- Banpu Public Company Limited - Thailand
- SMC Global Power, Philippines
- Standard Chartered Bank - UAE
- Deloitte Consulting - India
- Gujarat Sidhee Cement - India
- Economic Council, Georgia
- Romanian Commodities Exchange
- The Treasury - Australian Government
- The University of Queensland
- Savvy Resources Ltd - HongKong
- Krishnapatnam Port Company Ltd. - India
- Global Business Power Corporation, Philippines
- Videocon Industries ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Interocean Group of Companies - India
- Iligan Light & Power Inc, Philippines
- Indonesian Coal Mining Association
- Africa Commodities Group - South Africa
- Jaiprakash Power Ventures ltd
- Binh Thuan Hamico - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- Therma Luzon, Inc, Philippines
- Borneo Indobara - Indonesia
- Sical Logistics Limited - India
- SN Aboitiz Power Inc, Philippines
- Agrawal Coal Company - India
- Siam City Cement - Thailand
- Eastern Coal Council - USA
- Ind-Barath Power Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Planning Commission, India
- PetroVietnam Power Coal Import and Supply Company
- PTC India Limited - India
- Minerals Council of Australia
- Cigading International Bulk Terminal - Indonesia
- LBH Netherlands Bv - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- SMG Consultants - Indonesia
- Mercator Lines Limited - India
- Australian Coal Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Baiduri Energy - Indonesia
- Parliament of New Zealand
- Cement Manufacturers Association - India
- Vizag Seaport Private Limited - India
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Meralco Power Generation, Philippines
- Formosa Plastics Group - Taiwan
- Edison Trading Spa - Italy
- Eastern Energy - Thailand
- Essar Steel Hazira Ltd - India
- New Zealand Coal & Carbon
- TeaM Sual Corporation - Philippines
- Heidelberg Cement - Germany
- Aditya Birla Group - India
- IHS Mccloskey Coal Group - USA
- Star Paper Mills Limited - India
- GVK Power & Infra Limited - India
- CIMB Investment Bank - Malaysia
- Kepco SPC Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- India Bulls Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Alfred C Toepfer International GmbH - Germany
- Bharathi Cement Corporation - India
- Semirara Mining Corp, Philippines
- Rio Tinto Coal - Australia
- Grasim Industreis Ltd - India
- Bayan Resources Tbk. - Indonesia
- Dalmia Cement Bharat India
- Kohat Cement Company Ltd. - Pakistan
- GN Power Mariveles Coal Plant, Philippines
- Electricity Generating Authority of Thailand
- Marubeni Corporation - India
- Samtan Co., Ltd - South Korea
- Indogreen Group - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Miang Besar Coal Terminal - Indonesia
- Sakthi Sugars Limited - India
- VISA Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Posco Energy - South Korea
- Trasteel International SA, Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Commodity Traders Exchange
- Salva Resources Pvt Ltd - India
- Sojitz Corporation - Japan
- Power Finance Corporation Ltd., India
- Pipit Mutiara Jaya. PT, Indonesia
- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- Medco Energi Mining Internasional
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Attock Cement Pakistan Limited
- Ministry of Finance - Indonesia
- OPG Power Generation Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Bhushan Steel Limited - India
- Orica Australia Pty. Ltd.
- Bukit Makmur.PT - Indonesia
- Goldman Sachs - Singapore
- South Luzon Thermal Energy Corporation
- Global Green Power PLC Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Altura Mining Limited, Indonesia
- Indian Energy Exchange, India
- Bhatia International Limited - India
- Central Electricity Authority - India
- Wilmar Investment Holdings
- Semirara Mining and Power Corporation, Philippines
- Carbofer General Trading SA - India
- Bulk Trading Sa - Switzerland
- Toyota Tsusho Corporation, Japan
- Sindya Power Generating Company Private Ltd
- Aboitiz Power Corporation - Philippines
- Thai Mozambique Logistica
- Karaikal Port Pvt Ltd - India
|
| |
| |
|
