Showing posts from September 26, 2021

Oil Price: US Intervention, falling crude inventories and China's energy woes cause ripples in the crude oil markets

  The price of crude oil fell again on Friday, having crossed the psychologically significant $80 a barrel for Brent on Wednesday, wiping off the gains of the last two days. As of 09:30 GMT, the prices were at $74.26 and $77.60 respectively. The sentiments that triggered off the fall may have stemmed from the combination of three crucial factors: the explicit US intervention, asking the OPEC+ to produce more oil soon as the prices at this level are damaging to the global economy; rising US crude inventories, despite the forecasts to the contrary; China’s power shortages, coupled with slowing economy and growing political rivalries with its regional neighbours – and beyond. The unusual announcement by Jake Sullivan, the US National Security Advisor that he would take up the issue of rising oil price with Saudi Arabia, the de factor leader of the OPEC, despite that not being in the administrative domain of the top official, immediately affected the crude oil markets. On Thursday, J

Fossil fuels are not going away even after 2045 - OPEC+

  Having been emboldened, perhaps, by the chaos engulfing the global energy markets, the OPEC+ says the fossil fuels will still be in use through 2045 and beyond and there will not be a perfect substitute for it for decades to come. OPEC+ admits that the tendency to embrace renewable sources will continue unabated. It, however, will be like the digital divide between the poor and wealthy nations in the information age, with the rich nations moving ahead with it much faster than the poorer nations, leaving behind the latter to do the catching-up. OPEC+ made its latest upbeat forecast known on Tuesday in its annual World Oil Outlook. OPEC+ expects 28% growth in energy demand in proportion to an increase in population in 2045, by over 1.7 billion people. The cartel says that in order to meet the expected two-fold growth prospect in a period of 25 years from now, the energy generation must meet a significant increase. Dr Mohammed Barkindo, the Secretary General of the OPEC+, meanwh

Oil Price: Brent crosses the psychologically-important $80 barrier

  The price of Brent crossed the psychologically important $80 barrier in the early hours, today, undoubtedly causing ripples across the corridors of power across the world. As of 10:30 GMT, the prices of two major benchmarks, WTI and Brent, stood at $76.27 and $80.23 respectively. It is obvious that the demand picked up much faster than analysts anticipated it would and it inevitably led to the rise in crude oil price. The OPEC+ meeting, scheduled to be on October 4, will be the focus of analysts, investors, traders and of course, politicians with the cartel being under enormous pressure to increase the production – or at least to reverse its production cuts, announced last year,   by a significant amount. Even the analyses by OPEC+ did not anticipate a rebound in demand on this scale. That was the reason for them to exercise restrain, when it came to increasing productions. The main importers, meanwhile, resorted to tapping their strategic petroleum reserves in order to ste

Rising crude oil price: inverse correlation between demand and supply is blatantly clear now!

  The price of crude oil in the international markets has been rising this week, leaving the fluctuating uncertainties that we saw in the past few weeks behind. As of 16:30 GMT, the price of WTI and Brent stood at $75.36 and $79.49 respectively. It’s now, more or less, determined by the two basic factors of economics – the demand and supply. Since the Delta variant across the globe on the wane, the global economies are springing back into action like an animal coming out of hibernation; the momentum is increasing much faster than analyst thought it would. The crude oil output by the OPEC+ and other global players in the realm cannot keep up with the rising demand; the major importers, in order to address the combination of supply deficit and the rise in crude oil price, are tapping their strategic oil reserves – perhaps, as the last resort. In Europe, meanwhile, the gas crisis shows no sign of dying down. Fuelled by the petty politics, the situation can only get worse, before

European energy crisis: the perfect storm that many did not see coming to a city near us!

    At the height of the 2008 financial crisis that came about out of the blue, Queen Elizabeth ||, the British Monarch, was reported to having asked some experts in the field, “Why no one saw this coming?” at an event in the aftermath of the disaster. Of course, Her Majesty’s audience could not give a simple answer to an equally simple question. Nor the latter themselves knew what really went wrong, when the world had been led to believe the polar opposite – unstoppable global prosperity. What we witness today in the European energy markets is no different: nobody knew this was coming about six months ago. Some may, in retrospect, point to their own past analyses to cash in on the dearth of severe, expert predictability in the energy markets at present. It’s true in the last few weeks there were speculations about an impending gas crisis in Europe. Since they were, more often than not,   linked to the so-called ‘Russian manipulations’, they could not convince many sane people

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