China Oil
January 11th, 2010 at 10:06am
Under China Oil
A couple weeks in a row the price of a barrel crude oil rose but last Thursday China made an end to the oil price party. For now at least, due an economic recovery in the offing, analysts expect that the demand for oil will further increase in the coming months rather than decrease.The Chinese central bank Thursday shook oil investors in oil and woke them up from their dream of ever rising oil prices. The continuing cold weather in Europe and parts of the United States was the main reason of the quick oil price rally in the last couple of weeks. The price of a barrel crude oil rose more than $11 in ten days, leading to a price of around $ 83, the highest in fifteen months.As surprise for many among us the monetary authorities in China broke with the easy and broad policy of lending money to banks. A monetary tightening policy could lead to a lower growth of the Chinese economy and thus a decrease in demand for oil on the long term. These descisions of China, the second largest consumer of oil, had a direct effect on the oil price last week. In New York was the price of a barrel of oil during the first hours trading almost a U.S. dollar per barrel down. Later this drop weakened down to $ 0.45 to $ 83.73. In London the price of oil was also $0.45 back to $81,44.
Fuel for the Economy
In recent years, the Chinese banking system of provided the economy with enough liquidity to fight the economic crisis. Banks were ordered to provide much financial credits to the economic engine to provide sufficient fuel to face the problems of an economic downturn. It succeeded because the growth in Chinese gross domestic product (GDP) has remained a normal level during this period.The central bank, the People’s Bank of China, is clearly done with this broad policy for the banks and so adjusted the policy overnight. Analysts expect the monetary authorities to skim the liquidity of commercial banks by 137 billion yuan ($ 20 billion this week. This is the largest decrease in eleven weeks. ”Lending to the industrial sector is less interesting,” as said by analyst from Barclays Capital. An official interest rate increase is not expected before the second half of this year.
U.S. Dollar
China was not the only factor that lowered oil prices last week. The second factor was the U.S. dollar, which continued its march to an increase of 0.7% against the euro. A stronger dollar makes investing in commodities relatively less attractive.The cause of the dollar increase was due better than expected U.S. economic figures. The number of applications for unemployment benefits rose in the week to January 2nd 1000, while analysts had expected an increase of 7000. Today, new figures on employment in the United States gives a detailed picture of the economic recovery in the world’s largest economy.
Breather
The slight decline in oil prices, is according to some analysts no more than a respite on the way to further increase of the oil price in 2010. ”It is nothing compared to the increases of the past weeks,” said one analyst at the Bloomberg news agency. ”For a couple of days the price can further decrease in performance, but it is only temporarily for the optimists.”
Oil Critics
A rising group of oil critics and traders become convinced that the recent 20% price increase is not justified, given the slowly demand development for oil and oil products in the United States.Oil prices rose sharply from mid December from a level of $ 69 per barrel. The U.S. Energy Information Administration, a part of the Energy Department, stated last week that oil stocks could go down further.According to oil traders Ritterbusch and Associates is an oil price above the level of $ 83 per barrel at this moment indeed a new oil bubble. A sharp fall in oil prices is not excluded, such as when the winter weather in the northern hemisphere begins to depart. A structural demand increase is not seen at this moment.However, due to the cold winter stocks of heating oil will decrease rapidly. Barclays Capital thinks that this could support the oil prices if the winter continues much longer.
By Oilism.com
March 11th, 2009 at 05:53am
Under China Oil+ Crude oil+ OPEC+ Oil+ Oil Price 2009+ Oil Price 2010+ Production levels
OPEC has more reason than ever to cut the oil productions. Will the oil cartel be able the push back oil prices again?
“A price of 75 dollars a barrel is fair for oil producers and consumers. This is said by Saudi Arabia last year, according to Bloomberg. With this in
mind is a further reduction of the oil production by OPEC this week is certainly not unlikely. With over 40% of the total world production is the power of OPEC
very big.
Since the Brent Crude Oil futures on July 11, 2008 set a record oil price of $ 147.50 it got in a free fall. On December 24, 2008 the oil price hit as low as USD36.20, a decrease of 75% in five months. It is therefore not surprising that oil producers benefit of oil production cuts. Since September 2008, the OPEC production is already decrease with 13%. The oil price is now stabilized, the crude oil futures move since early 2009 within a bandwidth of 39 and 52 dollars.
Market focus mainly on oil demand failure
The oil markets focussed in the past few months with more attention to OPEC and the production side. Traders look today way more to the demand side of the oil market. That is not crazy, given the recession in the U.S. The U.S. labor market figures on Friday March 6 to speak for it self. Unemployment rose to 8.1% in February 2009, the highest level in 25 years. Moreover the U.S. lost in the last quarter a small 2 million jobs, the fastest pace since 1939 when analysts began tracking the data. With one quarter of the global oil consumption is the demand from the U.S. very important.
The recession & financial crisis is for sure not limited to the USA only. For example, the World Bank stated that the entire world economy will show shrinkage for the first time since 1945. Proving the demand for oil is closely connected with the growth of world economy. The black gold is indispensable for transport, industry and many other sectors. If economic activity is declining, falling demand for oil is a logical trend you can expect. The International Energy Agency (IEA) are taking into account a decline in demand for oil in 2009 by 1.1% year on year to 84.7 million barrels of crude oil per day, even after a decline in 2008 0.4% 5. Two years of falling demand figures didn’t occurred since 1982/1983, says the IEA.
Where should an oil investor look out for?
The oil price is obviously determined by demand and supply at this moment. If OPEC again decreases the oil production, it can have a big impact on current oil prices. In the last few days we already could notice some upwards movements: the price of oil rose Monday in New York to the highest level in six weken. In the upcoming months, for each oil investor of today it is important to focus on the development of both demand as the supply side of crude oil. This week first - very cautious - Signs of recovery on the demand side were noticed. The U.S. business confidence ISM rose for the second month in a row. While China - the second biggest oil consumer in the world - takes an economic growth in 2009 8% in to account.
On the supply side are the current developments around OPEC of big importancy. Geopolitical tensions in Nigeria, Iran could influence worldwide oil markets. In time, the crisis could trigger higher oil prices says the IEA. The sharp drop in oil prices makes investing in new oil production capacity unattractive and can put the oil supplies in 2009 further under pressure.
By Oilism.com
February 20th, 2009 at 05:44pm
Under China Oil+ Middle East+ Oil+ Oil Price 2010+ Oil politics+ Production levels
From next year a lack of oil arise as the world economy recovers from the current deep recession.
This is said by the chief executive of the International Energy Agency (IEA) Nobuo Tanaka, he states that oil producers are investing too little in new projects with current market circumstances.
”The demand for oil is very low because of the extremely poor economic conditions. But if the recovery quick, likely first signals occur after 2010, we face a serious supply problem, if the investments do not increase’’said Tanaka.
Oil Projects
The members of oil cartel OPEC said earlier this month that they are disappointed, because of demand for oil thirty-five of all new oil projects are set on the long term.
Tanaka expects oil demand will grow next year by 1 percent, thanks to the recovery of growth in emerging economies like China and India. This year, the need for oil by the global recession is likely(for sure) lower than a year earlier.
Production
The chief executive of French oil group Total, Christophe De Margerie, warned Monday in the British newspaper Financial Times that oil producers already are near their production levels. Worldwide, the crude oil production is never higher than 89 million barrels per day. These are four million barrels per day less than he previously thought. The current demand for oil is about 84 million barrels per day. The IEA expects that the long term oil need for 2030 will certainly have grown to 100 million barrels per day.
Tension
According to De Margerie, the companies limited by the high cost of new projects, for example, in Canada and the continued political tensions in Iran and Iraq.
The current low oil revenues, according to him not only at the expense of new projects. They shall also ensure that existing projects are more likely to be stopped because it is too expensive they are longer in operation.
By Oilism.com
January 21st, 2009 at 05:31am
Under China Oil+ Middle East+ OPEC+ Oil Price 2009+ Oil and gas+ Oil politics+ Russian Oil & Gas
By signing the gas agreement between Russia and Ukraine the oil price fell back sharply. The price of a barrel of U.S. light crude oil now hovers around 34 dollars, a decrease of over 7 percent with earlier this week.
In December 2008, crude oil prices fell for the first time since the summer of 2004 under the 40 dollar per barrel barrier. In July 2008, oil prices showed a record of more than 147 dollars a barrel.
The oil price now strongly react on the developments in the Middle East and the gas conflict between Russia and Ukraine. According to the Ukrainian Prime Minister Julia Timosjenko Russian gas will continue to flow to Ukraine and other European customers as from yesterday.
Credit Crisis & Oil demand
The oil price falls due a weakening oil demand. After 25 years of growth, the demand for oil in 2008 decreased by 0.3 percent. The International Energy Agency (IEA) has estimated that the worldwide oil demand in 2009 will fall further, probably by 0.6 percent.
For 2009, the IEA expects we will see a bottom in the oil demand, lowering with 940,000 barrels of crude oil per day to 85.3 million in total. “It’s the biggest change in our estimate over the last couple of years,” said David Fyfe of the IEA chief marketing officer.
In earlier reports, the institute published a growth for 2009 in oil demand after the losses of 2008, this mainly based upon the increasing demand of the emerging economies. But, these estimates are now showing that the Chinese oil demand will grow with just 90,000 barrels a day, which is the lowest increase in eight years time.
By Oilism.com
December 23rd, 2007 at 06:33pm
Under China Oil+ Crude oil+ Historical oil prices+ Middle East+ OPEC+ Oil+ Oil politics+ Oil price+ Production levels
The price of oil was well low at $25/barrel in late 2003 but jumped to double at whooping $60/barrel in the mid 2005. There was an uncontrolled change in the price of oil in most of times since 2005 to 2006 with some high and downs but settled at around $50-$60/barel in the early 2007. But this was not enough so it raised more above the price of $92/barrel in late 207 and ended up at about $99.29 in NYMEX futures in November end of 2007.
This clearly shows that oil prices has been increasing by passing years and the price tag of $100/’ barrel is clear to cross in the year 2008. Perhaps the price may increase above that if there are political conflicts in Middle East or any more OPEC production cuts. This uncertainty in the oil prices shows the indication of inflation of 1980 which was led to an economic recession. There are many philosophies that has attributed that US economic and political factors like UR-Iran conflict, North Korea Missile Launch, Israel- Lebanon crisis and decreasing US oil reserves are some determine factors of international oil prices.
There are many reasons to decrease in supply of oil that is main factor being increasing oil prices. The demands and supply policy of economics makes it true as if when ever the oil supplying countries like Iran and Saudi Arabia cut down the oil supplies then that is going to bring a surge in price in international market. The conflict in Middle East is the major reason behind this and even outside Middles East countries like Venezuela and other African countries producing oil have been facing local unrest like strikes and civil wars that has forced for decrease in oil supplies. Moreover the increasing terrorism by certain faction of people in oil rich countries has added to this price increase of oil.
A recent survey shows that the total supply of oil in recent times is 83 million barrel per day which is more than any other time in the history but the speculation that the a major Peak oil situation is nearing and a reducing oil supply is just in the near future has created a panic situation in the international market. Few secondary factors like OPEC supply cut and decreased value of dollar is too important reason for sudden increase in oil prices.
By Oilism.com
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