Showing posts from December 20, 2020

Oil price remains strong: clear signs of Coronavirus fatigue

  Oil price does not seem to be dependent on the Coronavirus news any more whether the latter comes in the form of spikes, waves or even the formulation of new vaccines. The price remains strong defying the factors that could otherwise have brought it down significantly. The investors have finally realized that the world will deal with the pandemic at some point - or new variants will be less deadly than what we saw at the beginning of the year. A stable oil price close to $50.00 a barrel is good both for the consumers and oil producers for several seasons. The consumers can keep their fuel bill at a manageable level at a very difficult time when uncertainty looms on many fronts. As for producers, especially in the Middle East, they can just balance the books and minimize the social unrest in the hope things will improve; there is already unrest in Iraq, the country with massive oil reserves, next to Saudi Arabia, over its currency devaluation – the worst ever. In addition,

Oil price forecast from models: not a substitute for an investor's instinct

  Change Weekly Data: Data Source: EIA   "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ." - Warrent Buffett     The crude oil price recorded its lowest ever value on April 20 this year, when it went negative for the first time in its history. What it meant in practice, despite being relatively brief, the oil producers had to pay their buyers to store oil! A few countries cashed in on the opportunity, including China, the US and India; for some, the lack of storage facilities and corresponding transport challenges got in the way, when the new-found fortune amplified the enthusiasm for going on a buying spree. On one hand, as far as buyers were concerned, it was like discovering a fountain of fresh water in an arid land. On the other hand, for investors and oil producers, it was their worst nightmare. The investors and producers have been relying on model-based forecasts for d

Why does oil price remain high despite uncertainties? EIA data sheds ligh on the development

  Oil price remains fairly buoyant despite the ripple effect of the new variant of the Coronavirus that almost drowned the hopes of the efficacy of the vaccines that grab headlines. The latest data released by the EIA, the US Energy Information Administration, sheds light on the unexpected phenomenon. In fact, as far as oil markets are concerned, the data is pretty encouraging. Both crude oil inventories and distillate fuel inventories are down for two successive weeks, up until December, 18. Gasoline production, meanwhile, is up too against the odds. The other encouraging news is that the US refineries work at 78% of their usual capacity. The latest data from the EIA comes in the wake of positive news about the steady demand in Asia for the commodity. In addition, the discoveries of new oil fields, especially in Africa, further enhances the investor confidence that in turn makes the sector grow with an irreversible emphasis on the need of cutting down on the pollution. Inv

Cairn Energy wins an arbitration in its favour in India

  Cairn Energy PLC, an independent, UK-based oil and gas exploration, development and production company, has won arbitration against the Indian government on Wednesday. It was over levying Rs 10,247 crore - in Indian currency - or $1.2 billion in retrospective taxes, that the Indian government had claimed during the period, 2006-07, followed by a reorganization of the company’s Indian arm. A tribunal ruled that the Indian government must release the funds withheld along with the interest to Cairn Energy PLC, the Scottish oil exploring company. Cairn Energy PLC claims the role it played over a long period of time in exploring, discovering, developing and producing oil and gas in a variety of locations in the world, while involving itself as an avid operator and partner in all stages of the oil and gas life cycle. The share price of the company surged exponentially at  the news, before falling moderately for an adjustment.

Coronavirus New Strain: Oil price remains fairly stable

  Change Period: Data Source: EIA The news about the new Coronavirus strain, quite unfairly, stigmatized the United Kingdom with some countries banning any physical contacts with its inhabitants.   The evolution of a virus in nothing new; the seasonal flu viruses do it all the time, while staying a step ahead of vaccine available at a given time.   In this context, Coronavirus will evolve too and pose a challenge to the few vaccines in the public domain at present.   Although the new strain of the virus is said to be much more contagious than its predecessor that almost brought the entire world to its knees in spring this year, how ferocious the former remains to be seen.   The initial indications are, encouragingly, it is not that deadly.   If that is the case, this virus – or any other virus for that matter – seems to be conscious of what it is doing without the organs that we possess in biological sense.   Since medical science has no explanation why they mush

Oil prices extend gains and rig count shows a healthy growth

There is plenty of bad news on the Coronavirus front, especially in Europe, owing to the discovery of a new strain that has the potential to spread fast.  The oil price, much to analysts' surprise, maintained the upward momentum, though, defying the gloomy news on the new infections. Things may change slightly in the coming days as we enter the muted festive season. The oil price, however, will bounce back proving the critics wrong - once again. In Western Europe where the lockdown measures are tough, there will be a decline in motor traffic - and air travel too - and it may reflect on the demand. As a result, the oil price will be affected to some extent in the coming weeks - something to be expected. The fact of the matter, however, is that it is not something irreversible; nor has it reached the point of no-return. It's just an adjustment, due to the combination of seasonal impact and low traffic on roads. The effect on oil price will gradually be eased in proporti

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