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, 13 February 24
WHAT IS THE OUTLOOK FOR THE NATURAL GAS SPOT PRICE IN 2024 AND 2025? EIA
We expect the U.S. benchmark Henry Hub natural gas spot price to average higher in 2024 and 2025 than in 2023, but to remain lower than $3.00 per m ...
Monday, 12 February 24
US THERMAL COAL EXPORTS HIT 5-YEAR HIGHS AND TOP $5 BLN IN 2023 - REUTERS
United States exporters of thermal coal earned more than $5 billion in 2023 as they shipped out more than 32.5 million metric tons of the high-poll ...
Tuesday, 06 February 24
NEW E-FUELS PROJECT TO MAKE INTERNATIONAL SHIPPING CLIMATE-NEUTRAL - RINA
Transport and trade on the ocean blue must be made much greener. This is the goal of the new €17 million European GAMMA project, where compani ...
Tuesday, 06 February 24
INDIA SEES ANNUAL COAL OUTPUT UP 10.9% IN 2024/25 - REUTERS
India expects domestic coal output to increase by 10.9% to 1.13 billion metric tons in the fiscal year ending March 2025, a senior government offic ...
Tuesday, 06 February 24
INDIA'S COAL PRODUCTION INCREASES BY 10.3% TO 99.73 MILLION TONNE IN JANUARY - PTI
The country’s coal output rose 10.3 per cent to 99.73 Million Tonne (MT) in January, over the same month in the previous fiscal.
...
|
|
|
Showing 36 to 40 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Electricity Authority, New Zealand
- Minerals Council of Australia
- Bukit Makmur.PT - Indonesia
- Commonwealth Bank - Australia
- Cement Manufacturers Association - India
- Cigading International Bulk Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhushan Steel Limited - India
- Savvy Resources Ltd - HongKong
- Dalmia Cement Bharat India
- MS Steel International - UAE
- Standard Chartered Bank - UAE
- International Coal Ventures Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Orica Australia Pty. Ltd.
- Economic Council, Georgia
- Heidelberg Cement - Germany
- Independent Power Producers Association of India
- India Bulls Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Makarim & Taira - Indonesia
- Bayan Resources Tbk. - Indonesia
- Jaiprakash Power Ventures ltd
- Bhoruka Overseas - Indonesia
- Aboitiz Power Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Intertek Mineral Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- Madhucon Powers Ltd - India
- Kideco Jaya Agung - Indonesia
- Mercator Lines Limited - India
- Mintek Dendrill Indonesia
- Petron Corporation, Philippines
- Australian Coal Association
- Directorate General of MIneral and Coal - Indonesia
- GVK Power & Infra Limited - India
- Lanco Infratech Ltd - India
- TeaM Sual Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- SMC Global Power, Philippines
- Mjunction Services Limited - India
- Borneo Indobara - Indonesia
- Central Electricity Authority - India
- McConnell Dowell - Australia
- Maheswari Brothers Coal Limited - India
- Bukit Baiduri Energy - Indonesia
- Rio Tinto Coal - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bangladesh Power Developement Board
- Global Business Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Directorate Of Revenue Intelligence - India
- Marubeni Corporation - India
- Wilmar Investment Holdings
- PTC India Limited - India
- Rashtriya Ispat Nigam Limited - India
- Merrill Lynch Commodities Europe
- The University of Queensland
- Miang Besar Coal Terminal - Indonesia
- Australian Commodity Traders Exchange
- Trasteel International SA, Italy
- Sojitz Corporation - Japan
- Parliament of New Zealand
- Power Finance Corporation Ltd., India
- Indika Energy - Indonesia
- Edison Trading Spa - Italy
- Mercuria Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Salva Resources Pvt Ltd - India
- Goldman Sachs - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Finance - Indonesia
- IHS Mccloskey Coal Group - USA
- Grasim Industreis Ltd - India
- SN Aboitiz Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Sical Logistics Limited - India
- Sinarmas Energy and Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Kumho Petrochemical, South Korea
- Kaltim Prima Coal - Indonesia
- Star Paper Mills Limited - India
- Africa Commodities Group - South Africa
- Ind-Barath Power Infra Limited - India
- Sree Jayajothi Cements Limited - India
- Electricity Generating Authority of Thailand
- The Treasury - Australian Government
- SMG Consultants - Indonesia
- Jindal Steel & Power Ltd - India
- Eastern Coal Council - USA
- Siam City Cement PLC, Thailand
- Bulk Trading Sa - Switzerland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhatia International Limited - India
- Thiess Contractors Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Gujarat Sidhee Cement - India
- IEA Clean Coal Centre - UK
- Alfred C Toepfer International GmbH - Germany
- Energy Development Corp, Philippines
- Metalloyd Limited - United Kingdom
- ASAPP Information Group - India
- Asmin Koalindo Tuhup - Indonesia
- PowerSource Philippines DevCo
- PetroVietnam Power Coal Import and Supply Company
- ICICI Bank Limited - India
- VISA Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- AsiaOL BioFuels Corp., Philippines
- CIMB Investment Bank - Malaysia
- Barasentosa Lestari - Indonesia
- Thai Mozambique Logistica
- Banpu Public Company Limited - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Baramulti Group, Indonesia
- Coastal Gujarat Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indogreen Group - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Romanian Commodities Exchange
- Manunggal Multi Energi - Indonesia
- Riau Bara Harum - Indonesia
- Ambuja Cements Ltd - India
- Renaissance Capital - South Africa
- Sakthi Sugars Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chamber of Mines of South Africa
- Semirara Mining and Power Corporation, Philippines
- White Energy Company Limited
- Samtan Co., Ltd - South Korea
- Xindia Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- San Jose City I Power Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Kartika Selabumi Mining - Indonesia
- Coal and Oil Company - UAE
- Planning Commission, India
- Latin American Coal - Colombia
- Ministry of Transport, Egypt
- Vedanta Resources Plc - India
- Iligan Light & Power Inc, Philippines
- London Commodity Brokers - England
- European Bulk Services B.V. - Netherlands
- Tamil Nadu electricity Board
- Ministry of Mines - Canada
- Deloitte Consulting - India
- CNBM International Corporation - China
- Meralco Power Generation, Philippines
- Eastern Energy - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Attock Cement Pakistan Limited
- Agrawal Coal Company - India
- Medco Energi Mining Internasional
- Port Waratah Coal Services - Australia
- Kobexindo Tractors - Indoneisa
- Aditya Birla Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bharathi Cement Corporation - India
- LBH Netherlands Bv - Netherlands
- Formosa Plastics Group - Taiwan
- New Zealand Coal & Carbon
- Meenaskhi Energy Private Limited - India
- Energy Link Ltd, New Zealand
- Singapore Mercantile Exchange
- Sindya Power Generating Company Private Ltd
- Kapuas Tunggal Persada - Indonesia
- GAC Shipping (India) Pvt Ltd
- Larsen & Toubro Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Uttam Galva Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Central Java Power - Indonesia
- Therma Luzon, Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Wood Mackenzie - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Orica Mining Services - Indonesia
- Indonesian Coal Mining Association
- Antam Resourcindo - Indonesia
- Indian Oil Corporation Limited
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement - Thailand
- Malabar Cements Ltd - India
- Parry Sugars Refinery, India
- Kohat Cement Company Ltd. - Pakistan
- Anglo American - United Kingdom
- Price Waterhouse Coopers - Russia
- Vizag Seaport Private Limited - India
- Sarangani Energy Corporation, Philippines
- Indian Energy Exchange, India
- Global Green Power PLC Corporation, Philippines
- Carbofer General Trading SA - India
- Videocon Industries ltd - India
- Interocean Group of Companies - India
- Oldendorff Carriers - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Georgia Ports Authority, United States
- Kepco SPC Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- GMR Energy Limited - India
- Straits Asia Resources Limited - Singapore
- Altura Mining Limited, Indonesia
- Global Coal Blending Company Limited - Australia
- Essar Steel Hazira Ltd - India
- OPG Power Generation Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Tata Chemicals Ltd - India
|
| |
| |
|
