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Showing posts from September 6, 2020

Factors that stalled oil price rise

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These are the factors that stalled the recovery of crude oil market, when the analysts and investors thought effect of Covid 19 was behind them. The situation is evolving; if the impact of the second wave of Covid-19 is not as bad as that of the first, things will improve, but that rate will be painfully slow. In short, the ball is in the court of those whohandle major economies; there is no room for strategic misjudgements or petty politics. What we need is a collective catalyst. More live data and charts are here: Please click

Oil Price Stagnation: rise in US crude oil stocks partially explains it...

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  Oil price has been seesawing worryingly in the last few days, reflecting the volatile nature both in the political and economic realms, partly being shored up by the pandemic and the possibility of its ‘second   coming’. The demand has been very low and it’s understandable in the current circumstances. Analysts, however, appeared to have overlooked a significant factor that the EIA, the US Energy Information Agency, identified that determines the oil price – the oil inventory build-up. The EIA said on Thursday that US crude stocks rose by 2 million barrels a day when the analysts estimated a drop of 1.3 million barrels a day – a strange reversal of figures – in the week leading to September 4. The EIA particularly blamed the rise in stocks on Hurricane Laura that hampered the activities at the refineries. In addition, the weak demand in jet fuel and gasoline contributed to the surge in stocks. You can view all the latest charts that matter here: Oil Price Charts that Matter

Stalled Oil Price Recovery: a factor often overlooked

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  Oil price has stalled and the stagnation, coupled with gloomy outlook on many other fronts, have left economists and analysts in limbo, as the combination of existing knowledge and experience does not give an impetus to come up with a solution. Whatever the in-depth analyses that surface in heightened frequencies to explain the crisis, it still stems from age-old concept of demand-supply. Although the focus is heavily on the industrial output and vehicular transport, those who watch the movements often overlook the factor of air transport and the demand for jet fuel that is the main factor in it. The above animation shows the number of airplanes in the skies above Heathrow on Tuesday morning – just 5 in total; two Middle Eastern airlines and one British airline. As someone who has been living below the flightpath near Heathrow, I used to notice an airplane once in every two minutes in the skies before the lockdown. It’s a far cry from what we used to notice. This is not jus

Oil Price: no sign of strong recovery in Asia

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As Saudi Arabia cut oil price for Asian region on the grounds of faltering demand, Reuters reports more bad news for the market. According to the report, Oil importers in Vietnam have been compelled to offer bonus to retailers to buy oil in order to clear their mounting oil stocks at ports. The lack of demand is highly correlated to the lack of industrial activity and movement of traffic owing to Covid-19, despite the crisis being handled very well – with fewer than 5 deaths. If Vietnam, a country that was left relatively unscathed despite being close to the epicentre of the pandemic, China, could not recover fast, analysts believe, the countries that have been badly hit in the region will struggle to revive their economies in the coming months. Having hit by waves of unpredictable events, the big oil producers in the Middle East will be forced to focus on diversifying their economies while knowing the danger of relying on just one source for generating revenue. Since the intended obje

Saudi Arabia to Cut Crude Oil Price: OPEC cuts did not do the trick intended

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  The investor lethargy continues in the oil markets in proportion to the degree of negative sentiment that looms over it. The early drop in price in Brent crude and WTI crude, 1.35% and 1.6% respectively on Monday, just reflects the current pessimistic mood in the markets. With the production cuts initiated by the OPEC having no desired effect on the crude oil price, Saudi Arabia cut prices to Asia, its largest market by region, in order to address the dwindling sales. On the ground, meanwhile, data shows that refineries cut output owing to weak demand. For instance, in the US, the world’s biggest oil user, the price of gasoline dropped to its lowest level since 2004 at the weekend before its Labour Day Monday, according to the EIA. The situation in China on this front is no different: the country that went on an accelerated buying spree during the pandemic, cashing in on the record-low prices, has since backed down; the storage facilities appear to be in full capacity and lot

Weekly Oil Price: IEA and Russia predict a big drop in demand

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The uncertainty that hangs over the oil markets shows no sign of abating. The Chinese crude oil stocks do not diverge from storage facilities as fast as analysts thought they would, leaving many tankers waiting at the ports. To make matters worse, Russia’s oil minister said that he would expect the global demand falling by 9 to 10 million barrels per day – an alarming scenario, when the producers can least afford to do it. This forecast is much more worse than what the IEA, International Energy Agency, did recently – a fall of 8.1 million barrels per day. Since the world, especially the developed world, could not keep Covid-19 at bay, the above doomsday-scenarios could only get worse, if the so-called second wave comes back with full force in the fall or beyond. In this context, the bone of contention between Turkey and Greece in the Mediterranean over gas exploration, US-China trade wars, skirmishes between India and China over the shared border and the developments in the S

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