LONDON, Feb 14 (Reuters) – Is the oil market heading
for a repeat of last year: a big run up in prices during the
first few months followed by a sudden crash when the inflows of
investment money dry up and early entrants try to realise their
gains?

There are eerie parallels. Like last year, strongly
accommodative central bank policy from the Federal Reserve and
signs of recovering economic activity in North America and
Western Europe are coupling with physical supply disruptions to
encourage a more bullish outlook for oil.

LONDON, Feb 13 (Reuters) – Seasoned oil market
observers have struggled to find an adequate explanation for the
surge in Brent prices over the past fortnight, which has taken
front-month futures to the highest level since July 2011.

But the conundrum becomes easier to unravel if the focus is
switched from the overall crude supply-demand balance, which
remains comfortable, to balances for individual fuels
(especially distillates) and the types of crudes being impacted
by the supply disruptions.

LONDON, Feb 9 (Reuters) – The dramatic collapse of
European refiner Petroplus and the decision to sell or close
three ageing refineries on the U.S. East Coast is only the first
phase of a revolution set to sweep the global refining system
over the next decade.

The current system has too many refineries in the wrong
places producing the wrong fuels. It will take a massive
upheaval to transform it into a system fit to meet the demands
of the world in 2020. In the process billions of dollars of
obsolete capital investments will have to be written off.

LONDON, Feb 7 (Reuters) – Forward oil prices are
trading at record discounts as the market responds to fears
about near-term shortfalls while also pricing in a big increase
in supplies from the Americas and the Middle East over the next
four years.

Front-month Brent futures have been trading above
$116 a barrel, the highest level since November and before that
September 2011, as freezing weather across Europe, signs of
revival in North America and renewed interest in the Brent-WTI
spread shake the oil market out of its recent torpor.

LONDON, Feb 6 (Reuters) – Fracturing oil and gas from
tight rock formations promises secure energy supplies for
generations, but only if industry and regulators can convince
voters it can be done safely without poisoning water supplies or
adding to global warming.

Like other forms of petroleum production, and innovative
technologies such as liquefied natural gas and nuclear, shale
gas and oil need a political “licence to operate”. The
still-born nuclear industry shows what happens when industry and
regulators fail to win the public argument over safety and
environmental impacts.

LONDON, Jan 30 (Reuters) – Investors’ enthusiasm for
commodity indices and other investment products has supported a
huge expansion in banks’ commodity desks as well as the number
of specialist commodity funds and hedge funds. The question is
whether it can be sustained if returns do not start to improve.

The best columns begin with a chart. This one starts with a
graph showing excess returns on the Standard and Poor’s Goldman
Sachs Light Energy Index since 1970:

LONDON, Jan 27 (Reuters) – Intra-day price movements
are becoming less informative about longer-term changes in oil
prices as the ratio of genuine price signals to random noise
deteriorates, at least over shorter-time horizons.

Even a cursory look at the chart for front-month Brent
futures reveals that significant intra-day moves are
increasingly being reversed before the market closes, more often
than not leaving prices back where they started.

LONDON, Jan 26 (Reuters) – EU sanctions on Iran’s oil
exports and fears about disrupted supply lines may not have made
bullish oil analysts more confident since the start of the year,
but they have forced bears with below price average forecasts to
scale back their estimate of downside risk.

Seven analysts have made significant changes to their
forecasts for average Brent crude prices in 2012 in January
compared with December, according to an analysis of the latest
oil price poll published by Reuters.

LONDON, Jan 26 (Reuters) – EU sanctions on Iran’s oil
exports. Signs of building economic momentum in the United
States. Renewed recession in Europe. China’s slowdown. Forecasts
from the Fed that it expects to leave interest rates at
ultra-low levels until the end of 2014.

Ordinarily any one of these factors would be enough to cause
a sharp move in oil prices. Prominent analysts have warned that
price risks on both the upside and the downside will be
unusually large in 2012. The mantra was “buy volatility”.

LONDON, Jan 25 (Reuters) – Hydraulic fracturing and
horizontal drilling have laid to rest concerns about peaking oil
and gas supplies for a generation, but they have also made the
search for comprehensive policies to restrain greenhouse gas
emissions more urgent.

In a world where fossil energy remains abundant and
relatively cheap the economy will combust increasing quantities.
Oil and gas reserves will last long after the planet has been
gently cooked unless governments enact deliberate policies to
restrain consumption.