The Great Debate UK
from The Great Debate:
Will oil prices stabilize around $80?
Most commentators and oil analysts are convinced a further rise in prices is inevitable in the next few years as emerging market consumption grows and supplies increasingly come from more costly and technically challenging sources such as ultra-deepwater.
While there are disagreements about the extent and the timing of price changes, there is a remarkable degree of consensus about the direction: up. But the roller-coaster experience of the last five years should have taught forecasters to be much more cautious about extrapolating trends and assuming the future direction is obvious.
Price forecasts are notoriously unreliable. There are simply too many variables and too much uncertainty about the current state of the market let alone how supply and demand will evolve in future. The crucial role of expectations in price formation adds an element to "reflexivity" which is hard for forecasters to anticipate or model accurately.
Reflexivity is a concept attributed to billionaire financier George Soros, in which perceptions of market direction and market fundamentals influence one another.
from Commentaries:
The electric car is a technological cul-de-sac
The End Is Nigh is always an arresting headline, the end which is nigh now is the Age of Oil, following the deep thoughts of the boffins at Deutsche Bank.
They are forecasting a "game change" as a result of - wait for it - the electric car. Their thoughts are "unburdened by the conflicting forecasting agendas of government agencies, oil companies or auto makers", so can roam the intellectual highways and byways.
from The Great Debate:
NYMEX oil benchmark again in question
-- John Kemp is a Reuters columnist. The views expressed are his own --
The record differential between the front-month and more liquid second-month contracts at expiry last week once again raised pointed questions about whether the NYMEX light sweet contract is serving as a good benchmark for the global oil market, or sending misleading signals about the state of supply and demand.
The expiring January 2009 contract ended down $2.35 on Friday at $33.87, while the more liquid February contract actually rose 69 cents to settle at $42.36 - an unprecedented contango from one month to the next of $8.49.
from Ask...:
How will the record OPEC supply cut affect consumers?
The Organisation of the Petroleum Exporting Countries agreed on Wednesday to make its deepest output cut ever to counter slumping demand and falling oil prices. The output cut has been received with cautious optimism by analysts.
Some say that the price of oil will fall further, while others say $40 a barrel was the lowest it will go. "If you look at the market, prices are going up immediately," said Frank Schallenberger, head of commodity research at Landesbank. "I really think this is the end of a bear market. $40 was the bottom."
from The Great Debate:
In China, OPEC’s nightmare comes true
-- John Kemp is a Reuters columnist. The opinions expressed are his own --
China's decision to link domestic fuel prices indirectly to the international crude oil market, subject to a price cap, while hiking the consumption tax on gasoline and diesel and phasing out a variety of road tolls and other fees shows Saudi Arabia's worst fears about high prices and demand destruction are starting to come true.
It seems likely to confirm the kingdom's determination to see prices stabilize around $75 per barrel, well below recent price peaks, and far below the level sought by some other OPEC members, as well as international oil companies and advocates of alternative energy.
