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 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- GN Power Mariveles Coal Plant, Philippines
- Energy Link Ltd, New Zealand
- Thai Mozambique Logistica
- Posco Energy - South Korea
- India Bulls Power Limited - India
- Mercator Lines Limited - India
- Samtan Co., Ltd - South Korea
- Globalindo Alam Lestari - Indonesia
- Xindia Steels Limited - India
- Ind-Barath Power Infra Limited - India
- Wilmar Investment Holdings
- Directorate General of MIneral and Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- PTC India Limited - India
- IHS Mccloskey Coal Group - USA
- Orica Australia Pty. Ltd.
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Banpu Public Company Limited - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indonesian Coal Mining Association
- TeaM Sual Corporation - Philippines
- The State Trading Corporation of India Ltd
- Global Coal Blending Company Limited - Australia
- Sarangani Energy Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Commonwealth Bank - Australia
- Madhucon Powers Ltd - India
- Oldendorff Carriers - Singapore
- Toyota Tsusho Corporation, Japan
- Tata Chemicals Ltd - India
- Intertek Mineral Services - Indonesia
- Merrill Lynch Commodities Europe
- Thiess Contractors Indonesia
- Attock Cement Pakistan Limited
- Economic Council, Georgia
- Tamil Nadu electricity Board
- Parry Sugars Refinery, India
- European Bulk Services B.V. - Netherlands
- Bulk Trading Sa - Switzerland
- Kohat Cement Company Ltd. - Pakistan
- Uttam Galva Steels Limited - India
- Australian Commodity Traders Exchange
- Coal and Oil Company - UAE
- Straits Asia Resources Limited - Singapore
- Maheswari Brothers Coal Limited - India
- Bhatia International Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Rio Tinto Coal - Australia
- GVK Power & Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Mines - Canada
- IEA Clean Coal Centre - UK
- Aboitiz Power Corporation - Philippines
- Baramulti Group, Indonesia
- Deloitte Consulting - India
- Petron Corporation, Philippines
- Coalindo Energy - Indonesia
- PowerSource Philippines DevCo
- Indogreen Group - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Sical Logistics Limited - India
- Goldman Sachs - Singapore
- Indian Oil Corporation Limited
- Simpson Spence & Young - Indonesia
- Central Java Power - Indonesia
- Essar Steel Hazira Ltd - India
- Minerals Council of Australia
- Pendopo Energi Batubara - Indonesia
- Sakthi Sugars Limited - India
- White Energy Company Limited
- GMR Energy Limited - India
- Alfred C Toepfer International GmbH - Germany
- CNBM International Corporation - China
- Edison Trading Spa - Italy
- Sojitz Corporation - Japan
- Rashtriya Ispat Nigam Limited - India
- Bayan Resources Tbk. - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- South Luzon Thermal Energy Corporation
- Cement Manufacturers Association - India
- International Coal Ventures Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Videocon Industries ltd - India
- CIMB Investment Bank - Malaysia
- Miang Besar Coal Terminal - Indonesia
- Wood Mackenzie - Singapore
- AsiaOL BioFuels Corp., Philippines
- Malabar Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- McConnell Dowell - Australia
- SN Aboitiz Power Inc, Philippines
- Singapore Mercantile Exchange
- Eastern Energy - Thailand
- New Zealand Coal & Carbon
- Mercuria Energy - Indonesia
- Agrawal Coal Company - India
- Renaissance Capital - South Africa
- Electricity Authority, New Zealand
- San Jose City I Power Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Anglo American - United Kingdom
- Bharathi Cement Corporation - India
- Borneo Indobara - Indonesia
- Siam City Cement PLC, Thailand
- Africa Commodities Group - South Africa
- Planning Commission, India
- Petrochimia International Co. Ltd.- Taiwan
- Sinarmas Energy and Mining - Indonesia
- Heidelberg Cement - Germany
- Latin American Coal - Colombia
- Coastal Gujarat Power Limited - India
- Sindya Power Generating Company Private Ltd
- Bukit Makmur.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Central Electricity Authority - India
- Timah Investasi Mineral - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Medco Energi Mining Internasional
- Binh Thuan Hamico - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Georgia Ports Authority, United States
- Salva Resources Pvt Ltd - India
- Bangladesh Power Developement Board
- Meenaskhi Energy Private Limited - India
- Grasim Industreis Ltd - India
- Savvy Resources Ltd - HongKong
- Sree Jayajothi Cements Limited - India
- Chettinad Cement Corporation Ltd - India
- Bhushan Steel Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Romanian Commodities Exchange
- VISA Power Limited - India
- London Commodity Brokers - England
- Indian Energy Exchange, India
- Kepco SPC Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Larsen & Toubro Limited - India
- Aditya Birla Group - India
- Bhoruka Overseas - Indonesia
- Krishnapatnam Port Company Ltd. - India
- SMG Consultants - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mjunction Services Limited - India
- Jindal Steel & Power Ltd - India
- Kideco Jaya Agung - Indonesia
- Global Business Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- MS Steel International - UAE
- Price Waterhouse Coopers - Russia
- Carbofer General Trading SA - India
- Gujarat Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Dalmia Cement Bharat India
- Metalloyd Limited - United Kingdom
- Barasentosa Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Lanco Infratech Ltd - India
- Siam City Cement - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indo Tambangraya Megah - Indonesia
- Kapuas Tunggal Persada - Indonesia
- ASAPP Information Group - India
- Holcim Trading Pte Ltd - Singapore
- Ambuja Cements Ltd - India
- Vedanta Resources Plc - India
- The University of Queensland
- Standard Chartered Bank - UAE
- Antam Resourcindo - Indonesia
- Altura Mining Limited, Indonesia
- Mintek Dendrill Indonesia
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- Billiton Holdings Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Asmin Koalindo Tuhup - Indonesia
- Parliament of New Zealand
- Kobexindo Tractors - Indoneisa
- PNOC Exploration Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- SMC Global Power, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vizag Seaport Private Limited - India
- Electricity Generating Authority of Thailand
- Riau Bara Harum - Indonesia
- Gujarat Sidhee Cement - India
- PetroVietnam Power Coal Import and Supply Company
- Star Paper Mills Limited - India
- Orica Mining Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Independent Power Producers Association of India
- The Treasury - Australian Government
- Energy Development Corp, Philippines
- Eastern Coal Council - USA
- Power Finance Corporation Ltd., India
- Kaltim Prima Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- LBH Netherlands Bv - Netherlands
- Australian Coal Association
- Kumho Petrochemical, South Korea
- Semirara Mining Corp, Philippines
- Indika Energy - Indonesia
- ICICI Bank Limited - India
- Interocean Group of Companies - India
- Marubeni Corporation - India
- Formosa Plastics Group - Taiwan
- Ministry of Finance - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Transport, Egypt
|
| |
| |
|
