Showing posts from May 1, 2022

High crude oil prices: perfect catalyst- exponential rise in gas prices

  The price of LNG,  liquefied natural gas, has gone up by over 100% since February this year and in the presence of such an increase, any hope of oil prices coming down at pumps just remains a distant dream. We have been told, both by irrefutable statistics and reliable analysts, that a recession is more or less cyclic - almost like the seasons in the northern and southern hemispheres; it comes about at fairly regular intervals, not necessarily being associated with human activities - good, bad or outright crazy. No expert, however, does say that the frequency of recession is entirely free from human activities; the recent forecasts of global economy as a whole grinding to a halt with a growth closer to zero is a case in point; in the realm of economics, two successive negative growths define a recession.  In a matter of 3 months, the gas prices have gone up by almost 100%. The invasion of Ukraine by Russia has made the situation worse with no end - politically, economically or milita

Oil Price: API reports a significant US crude inventory draw - exceeding its own estimate

  Amidst mushrooming uncertainties, the API, American Petroleum Institute, reported a significant draw of the US crude inventories during the last week, exceeding its own estimate for the period - 1.167 million barrels. Analysts hope that the data from the EIA, US Energy Information Administration, will confirm the trend by its own report due to be released on Wednesday.  The sudden escalation of the war between Russia and Ukraine made the energy forecasts by experts up until then, at best completely irrelevant and at worst, a statistical maze that can only make those who follow them leaving in a dizzy spell. Without credible substitutes, the West dragged the energy sector into the conflict in the hope of expediting the achievement of its political goals at the expense of the collective global economy and experts now do not talk about just the slow growth, but recessions  in the major economies.  The GDP forecasts for the Q1 2022 do not make good reading for any decision maker. The war

Crude oil prices: factors beyond producers' grasp

As the price of crude oil shows no sign of abating, the risk of a global recession has increased alarmingly, according to economists. With the conflict between Russia and Ukraine showing no sign of coming to an end soon, the supply side of the oil equation is not going to improve at all in the current circumstances.  On the contrary, in the absence of a major global producer, Russia, the price of crude oil is going to remain at the current level for the foreseeable future, especially when the rest of the OPEC+ sticks to a modest increase in daily production. As  the EIA, the US Energy Information Administration, clearly explains in the above image, contrary to the popular notion, producers are not the only key factor, when it comes to determining the crude oil prices at pump. In short, nearly 50% of the cost is beyond the producers' realm and in the current economic circumstances, taxes and production costs are not going to decline at all, when the rampant inflation starts to bite.