Showing posts from March 21, 2021

Oil Price: the effect of triple whammy pushes the price up

  The price of crude oil, which went down yesterday, rose again today, perhaps due to the fact that the yesterday’s optimism about a quick solution for getting the stricken tanker on track in the Suez Canal was grossly misplaced. That means the global oil supply are going to be affected in the short term, as Egyptian authorities implied that getting the traffic back along the narrow waterway could take weeks. Of course, the tankers that have piled up carry other goods to the West as well and the ripple effect will be felt beyond crude oil markets, unless the salvage operations show a bit more dynamism than what we witnessed in the last two days. The slow pace of rescue operations has triggered off a wave of online-memes, which could potentially hurt those who are in charge of the task as much as the tidal wave did to the stricken tanker. The presence of a medium-sized digger in the shadows of a super tanker, for example, more or less, reminds us of the proverbial squirrel that

Oil price: the Suez Canal factor and the role of sentiment

  The oil price that had been going down at an alarming rate in the last two weeks, got a catalyst on Wednesday morning out of the blue, when a massive cargo ship ran aground in the Suez Canal in the middle of a storm. With a gigantic obstacle blocking the path in the busy waterway, tankers have been spotted idling behind it, carrying millions of barrels of crude oil; understandably, the fear of an imminent supply shortage blew across the markets and the oil price went up. The scenario, once again, proved the fact that the sentiment is the king in the paradoxically fluctuating crude oil markets; it is an unsurmountable challenge to the data analysts who work, day in, day out, in search of the magic formula to predict the price accurately. So far, this pursuit has been of no avail. Last week, most pundits, who monitor every conceivable factor that could determine the crude oil price, were in unison in declaring the decline in oil price; that, however, dramatically changed yester

Oil Price: the fear of a third wave takes its toll on the markets

  The oil price went down substantially today despite the encouraging news from airline industry about a slow, but steady recovery. The hopes, unfortunately, were dashed when the new data emerges from India shows there is a steep rise in Covid-19 in India, especially in Maharashtra state where the commercial capital, Mumbai, is in. The oil markets are always keen on watching the economic activities of the world’s third largest crude oil consumer. They pin their hopes on a rapid recovery from the worst economic contraction in 70 years, stemmed from a relatively successful vaccine drive. It’s true that Indians dropped their guard somewhat while hoping the success of the distribution of vaccines would deal with the problem once and for all; the steep rise in Covid-19 infections clearly show that’s not the case, perhaps sending out a warning to the rest of the world too. In neighbouring Pakistan too, there is an alarming rise in infections. Making matters worse for authorities, a r

Airline Industy: a ray of hope - at last

  The optimism in the airline industry about gradual return to normalcy is, after all, not just wishful thinking of those who have been severely hit by the pandemic; it is realistic, indeed. The number of planes in the Skies in the US and UK speaks volumes; in the UK, around Heathrow, there are plenty of planes in the sky, compared with what we saw about a week ago. The data from shows that is the case. Although the demand of diesel and petrol has recovered well the jet fuel did not recover in the same proportion, when there were no planes in the skies. The gloomy spectacle is changing fast, giving a multiple sectors, directly connected to air travel, a ray of hope – at last. Since a significant number of planes carry cargo from a continent to continent or within a continent, it is a really encouraging sign that the transportation of good by air will be close to pre-pandemic level in a matter of weeks, giving a life-line for the countries whose export revenues pl

Airlines back in the skies: will the demand of jet fuel recover fast?

  The airline industry, which was dealt a severe blow by the pandemic, shows the signs of recovery in America and Asia, judging by the number of planes in the skies over major airports in the two continents. If the latest trend continues in the face of accelerated vaccine drives, the analysts estimate that 2/3 of the flights of pre-pandemic time will be back in the air soon. In proportion to the growth, there will be a corresponding increase in demand for jet fuel, gasoline and diesel as the sectors revolve around the airline industry grow as well. In China too, passenger number on airplanes are rising and the skies are busier with activities close to the pre-pandemic level. That means, jet fuel demand in Asia continues to rise. In Europe, however, the picture is still gloomy:   Germany, France, Italy, Poland and Ukraine are on the verge of going back to lockdowns. To make matters worse, the politicians are wrangling over the vaccines, their origin and the side effects, even wh

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