International Oil Pricing Mechanism and Analysis on Oil Price Fluctuation Reasons

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "International Oil Pricing Mechanism and Analysis on Oil Price Fluctuation Reasons"

Transcription

1 International Oil Pricing Mechanism and Analysis on Oil Price Fluctuation Reasons By Mr. Wang Nengquan, Chief Economist Sinochem International Oil Company, Sinochem Corporation Hyatt Regency,Hangzhou, China 11th September, 2006 SINOCHEM 1

2 CONTENT Ⅰ. International Oil Price System Ⅱ. International Oil Pricing Mechanism Ⅲ. Main Factors Influencing International Oil Price Ⅳ. The Current International Oil Price Has Deviated Significantly From The Law of Value 2

3 The Evolvement and Development of International Oil Pricing Method Years Before 1960s 1960s 1970s 1970s 1980s 1970s 1980s Oil pricing method Fixed Price Fixed Price Market Linked Price maker Multinational oil companies Governments of Oil producing countries Market Price basis Marked price Official Fixed Price Benchmark oil The International Crude Oil Pricing Method has been Changing toger with development of Oil Market Structure. 3

4 The Evolvement and Development of International Oil Trading Methods Financial Institution Market Scale & Participants The Evolvement of International Oil Trading Methods and Tools Futures and Option Trading Company Producer & Consumer Spot Market Term Contract Swap + OTO Option Supplier Consumer Trading Time Mutual Agreement Independent price evaluation Futures Trading/ Standard Contract 4

5 The Major Five Spot Oil Markets and Three Futures Oil Markets In The World Spot markets: USA Spot markets: North-west Europe HSI NYMEX, 60% Spot markets: Caribbean ICE, 0.4%,60% Spot markets: Mediterranean Spot markets: Singapore 5

6 The Effect of Spot Market Price The current oil futures trading is evolved intricately from spot transaction to forward trading and finally to futures trading, spot market price is still important to international i oil price system. Before Before 1970s 1970s Spot Spot market market was was served served as as a tool tool for for Majors Majors to to adjust adjust oil oil surplus surplus and and deficiency deficiency and and exchange exchange oil oil products products between between each each or or Spot Spot trading trading only only amount amount to to less less than than 5% 5% of of total total international international oil oil trading trading and and spot spot price price normally normally reflects reflects price price of of term term surplus surplus After After oil oil crisis crisis in in The The spot spot trading trading increased increased gradually gradually and and oil oil spot spot market market is is no no longer longer a residual residual market market but but became became a marginal marginal market market which which reflects reflects production production and and refinery refinery cost cost of of crude crude oil, oil, and and its its profit. profit. The The spot spot price price has has already already become become benchmark benchmark for for oil oil companies companies and and government government of of oil-consuming oil-consuming countries countries to to make make oil oil policy,at policy,at same same time, time, some some term term contract contract began began to to relate relate to to spot spot market market There There are are two two prices prices in in oil oil spot spot market market one one is is real real spot spot trading trading price price or or price price is is evaluation evaluation made made by by some some organizations organizations through through research research and and track track to to price price level level in in market market 6

7 Futures Price Dominates International Oil System Definition: The oil futures price can be determined via bidding and asking in an open futures market. For standard oil contract with certain price, quantity and delivery place, those who can reach mutual agreements and strike a bargain earlier in future market can define ir traded price as future price The ranking of energy futures transaction in 2005 Futures Price The futures market has function of price-discovery to some degree and futures price has become beforehand index for change of international oil price. The public bid in oil futures trading houses becomes signal of future market supply-and-demand. The trading houses publish trading information in time for all over world and traders can get price information at any time All crude oil produced in or sold to North America is priced according to WTI as benchmark; crude oil produced in USSR, Africa and Europe or sold to Europe is priced according to BRENT as benchmark; crude oil produced in Middle East and sold from Middle East to Asia is usually priced according to Dubai as benchmark; and crude oil in Far East is priced according to light crude oil --Tapis from Malaysia and Minas of Indonesia 7

8 The Ranking of Futures Transactions serial number Trading House contract Trading Volume in 2005 Increase Rate 1 NYMEX WTI(1000 BBLS/LOT) 59,650, % The 2 IPE BRENT (1000 BBLS/LOT) 30,412, % ranking of energy resources terms in MYMEX TOCOM NYMEX NYMEX NATURAL GAS (10 BILLION BTU/LOT) 19,142,549 GASOLINE (100 KILO LITER/LOT) 17,448,561 WTI CRUDE OIPTION (1000 BBLS/LOT) 14,726,263 GASOLINE (1000 BBLS/LOT) 13, % % 27.91% 3.04% 7 NYMEX HEATING OIL (1000 BBLS/LOT) 13,135, % 8 IPE GAS OIL (100 TON) 10,971, % 9 SHFE FUEL OIL (10 TON) 9,809,550 8

9 Content Ⅰ. International Oil Price System Ⅱ. International Oil Pricing Mechanism Ⅲ. Main Factors Influencing International Oil Price Ⅳ. The Current International Oil Price Has Deviated Significantly From The Law of Value 9

10 The Fixed Price Fixed Price Fixed price is pegging price made between buyer and seller The crude seller usually requires refinery to pay in 30 days after B/L Refinery normally requires buyer to pay in 5-15 days Nowadays, this kind of price method is rarely applied 10

11 The Crude oil Pricing Mechanism Many crude oil term contracts apply formula calculations, which means to take one or several crudes prices as reference and plus a premium, it is also called floated price. The reference price is not a specific trading price of some crudes in certain time, but average spot prices before and after trading time, futures f price or offer price from some quote organizations Some crudes adopt quote price in some quote system and put it in formula as benchmark some crudes have to use or crudes quote because y have no quote for mselves The benchmarks in international oil trading are DTD,... WTI, Dubai, Oman, Tapis, Minas and etc. The quote system and price index reflecting spot price: Platts, Argos, Reuters, Associated price, APPI,ICP, RIM The quote in crudes spot market is usually FOB and some crudes use CFR 11

12 The Product oil s Pricing Method and Basis Pricing method The price mechanism for oil products varies according to different types and ir different specifications But still mainly traded as floating price which is based on a formula Pricing units There are several kinds of pricing units in different areas such as metric tons, U.S. barrels, gallons and liters Pricing basis The pricing basis is mainly quotations published by information agents which is accepted by both parties, such as Platt s, Argus, LOR, Rim etc. 12

13 The Product Oil s Pricing Period Pricing period The pricing period for oil products are mainly five days around Bill of Lading date, more specifically y are two days immediately prior to B/L date, B/L date, and two days immediately after B/L date. The final price falls on average of five mean quotations There are also some special pricing methods if mutually agreed The trade for oil products is more active than crudes and with multiple modes 13

14 The Product Oil s Pricing Mechanism There are three main product oil markets in world: Rotterdam in Nerlands New York in United States Singapore in Asia For instance, Platt s s is standard quote announcing organization for products oil in Singapore market, which is announced once every day (excluding weekends and holidays), and nearly all oil products pricing in far east region take Singapore price as reference. 14

15 Content Ⅰ. International Oil Price System Ⅱ. International Oil Pricing Mechanism Ⅲ. Main Factors Influencing International Oil Price Ⅳ. The Current International Oil Price Has Deviated Significantly From The Law of Value 15

16 History of International Oil Price Fluctuation Global oil prices since 1861 The international oil price is constantly on move, sometimes out of control, rolling upwards and downwards 16

17 Main Events in The International Oil Market No. The 1 st time Time Oct 1973 Jan 1974 Price: USD/BBL From Up to Main Reason The fourth Middle East War, reduction of output and oil embargo Supply- Demand Gap -4,3million bpd The 2 nd time The 3 rd time The 4 th time The 5 th time The 6 th time The 7 th time Dec 1978 Dec 1980 Dec 1985 Oct 1986 Aug 1990 Jan 1991 Oct Dec 1998 Dec Oct 2000 From 2004 till now From Up to From Down to From Up to From Down to From Up to fluctuate at high price Up to Since 1970s, global oil price has experienced several significant changes Revolution in Iran and Iraq-Iran War, reduction in output Demand growth slow down after two oil crises, while non-opec countries oil output increased Iraq invaded Kuwait,led to severe damage to oil fields in Kuwait. South-East Asia financial crisis, slow down of global economic growth, less demand for oil South-East Asia financial crisis basically recovered,speed-up of global economic growth, decreased oil storage, supply- restriction executed Limited OPEC spare production ability, bottlenecked refinery processing capability, performance of funds in bidding up prices with geopolitic and wear factors, etc -4million bpd +4million bpd -4,3million bpd +4million bpd - 4million bpd + 1million bpd 17

18 The Market Supply-Demand and International Oil Price Fluctuation The change of supply-demand structure had led to fluctuation of oil price First, demand increased continuou sly. The global oil demand had risen 20 times than those in 1930 s. Second, oil producing countries have limited ability to expand its production. The investment in oil industry is obviously deficient. Third, most of oil fields are suffering from natural descending of output, but re are few new large fields ever discovered over past thirty years. Fourth, non-middle East oil fields are usually difficult to exploit and high in investment cost, thus y are unable to recover decrease of production of old fields. Fifth, current OPEC oil output is approaching to its maximum capability; spare production capacity had declined from 6 million barrels per day in last 10 years to 1 million barrels per day nowadays. 18

19 The structure of market participation and International Oil Price Fluctuation Oil price was guided by structural changes in market participation There are many participants in international oil market, whose behavior driven by goal of benefit maximization has a huge impact on international oil prices. Latin America, Middle East and Africa have emerged National liberation movement and nationalization wave, gradually took over its sovereignty and oil rights, and established OPEC. They obtained pricing power of "official price", and began to use oil as weapons. The number of oilproducing countries has increased from about 20 by 1950s to about 30 by 1970s and 1980s, and more than 50 by 1990s. The oil market has formed a multi-polar pattern. 19

20 The Sales Structure Mode and International Oil Price Fluctuation Oil price was guided by changes in sales structure mode Prior to 1950s, world oil pricing pattern was price system, monopolized by "seven sisters". From 1960 s, until 1970s and 1980s, monopoly was gradually broken. And "official price" and "reference price" were introduced. In 1983, New York commodity exchanges (COMEX) introduced low sulfur light crude oil futures contracts, and it has become barometer guiding price fluctuations in world oil market. As a financial tool, future is separated from actual supply and demand situation in oil production, and affected by numerous factors. So it could be more easily manipulated and controlled 20

21 CONTENT Ⅰ. International Oil Price System Ⅱ. International Oil Pricing Mechanism Ⅲ. Main Factors Influencing International Oil Price Ⅳ. The Current International Oil Price Has Deviated Significantly From The Law of Value 21

22 China Is Not The Main Factor to Push Up International Oil Prices As a new participant of international oil market, although re has seen a considerable growth in China s oil imports, however, China is not main factor to push up international oil prices. For example, China s net oil imports amounted to million tons in 2005, only accounting for 5.94% of total world oil trade, and it had decreased by about 3.5 million tons compared with million tons imports in Therefore, it is impossible for China to be main factor to push up international oil prices 22

23 Representative non-opec oil supply costs Operating Costs($/bbl) Capital cost($/bbl) fully-built-up costs($/bbl) California heavy oil W. Canada heavy oil Alberta oil sands Venezuela Orinoco Mexico heavy oil U.S. Gulf ( > 200metres) Brazil ( > 200 metres) Angola (Girassol field) Alaska American stripper wells Malaysia offshore N. Sea (BP operated & 7 fields) average From The table we can see that re is little relationship between current international oil price and oil production costs 23

24 The Fund Manipulation and Its Relationship with WTI Price The data analysis in recent years shows that high relativity exits between oil long position held by New York Commodity Exchange Fund and WTI oil price movements. The higher long position it is held, higher WTI prices is, vice versa 24

25 Oil Has Become One of The Major Targets for Speculative Activity According to statistics by U.S. Commodity Futures Trading Commission By week ended at May 2, 2006, crude oil net long position held by Non-commercial institution speculators was high to a new level this year in New York CFTC. Net long positions held by Non-commercial institution speculators increased by 94,094 hand, which hit a history record. Also, contracts without offset reach a record high with more than 1 million hand. We believe that main reason of rising international oil prices in 21st century lies in funds swarming into oil futures s markets from large banks, hedge funds and or speculative capital in recent r years. The crude oil futures have become a tool for financial speculation 25

26 Conclusion Rising international oil prices, overall, are not conducive to development of world economy. On oil industry itself, high international oil prices may bring a round of low oil price. After second oil crisis from 1978 to 1980, oil prices remained low for 10-year-period since beginning of Therefore, high oil prices will be detrimental to sustainable development of world oil industry. United States and China are both big powers of world's oil production and consumption countries, refore governments and oil industry of two countries have responsibility and obligation to collectively maintain stability of international oil market and price China s oil industry is willing to work toger with United States and or counterparts throughout world to strengn bilateral and multilateral cooperation, exploit petroleum resources through investment, and increase supply of oil; to reduce excessive dependence on oil consumption through use of new technologies and new energy sources; to increase transparency of world oil market through information exchange, and or means, to contribute to stability of world oil market, and economy development of China and world 26

27 谢 谢! Thanks SINOCHEM 27

A Survey on Pricing of Asian Marker Crude Oil and Formation of Appropriate Market Prices 1

A Survey on Pricing of Asian Marker Crude Oil and Formation of Appropriate Market Prices 1 A Survey on Pricing of Asian Marker Crude Oil and Formation of Appropriate Market Prices 1 Yasuhiko Nagata, Senior Economist, Oil and Gas Strategy Group, Strategy and Industry Research Unit Sanae Kurita,

More information

INTRODUCTION. Production / Extraction of Oil. Distribution & Sale to refined products to end users

INTRODUCTION. Production / Extraction of Oil. Distribution & Sale to refined products to end users CRUDE OIL INTRODUCTION Crude oil holds prominence as input to the global growth engine since it is the most important source of energy accounting for more than two fifth of the global energy consumption.

More information

Oil markets, oil prices, and the financial crisis. Havana, October 30, 2009 Joel R. Couse, VP Market Analysis for Trading & Shipping

Oil markets, oil prices, and the financial crisis. Havana, October 30, 2009 Joel R. Couse, VP Market Analysis for Trading & Shipping Oil markets, oil prices, and the financial crisis Havana, October 3, 29 Joel R. Couse, VP Market Analysis for Trading & Shipping Oil is the World s biggest physical commodity market: over 15% of world

More information

Box 6 International Oil Prices: 2002-03

Box 6 International Oil Prices: 2002-03 Annual Report 2002-03 International Oil Prices: 2002-03 Box 6 International Oil Prices: 2002-03 Notwithstanding the state of the world economy, characterised by sluggish growth in 2002, the world crude

More information

What drives crude oil prices?

What drives crude oil prices? What drives crude oil prices? An analysis of 7 factors that influence oil markets, with chart data updated monthly and quarterly Washington, DC U.S. Energy Information Administration Independent Statistics

More information

PETROLEUM WATCH September 16, 2011 Fossil Fuels Office Fuels and Transportation Division California Energy Commission

PETROLEUM WATCH September 16, 2011 Fossil Fuels Office Fuels and Transportation Division California Energy Commission PETROLEUM WATCH September 16, 2011 Fossil Fuels Office Fuels and Transportation Division California Energy Commission Summary As of September 14, retail regular-grade gasoline prices in California increased

More information

5th Annual Oil Trader Academy

5th Annual Oil Trader Academy 5th Annual Oil Trader Academy ICE Futures Europe, London July-August 2015 ICE Education and IBH have combined their expertise to provide an innovative and practical programme covering all aspects of the

More information

STEO Supplement: Why are oil prices so high?

STEO Supplement: Why are oil prices so high? STEO Supplement: Why are oil prices so high? During most of the 1990s, the West Texas Intermediate (WTI) crude oil price averaged close to $20 per barrel, before plunging to almost $10 per barrel in late

More information

The interplay of physical and financial layers in today's oil markets

The interplay of physical and financial layers in today's oil markets Master of Advanced Studies in International Oil and Gas Leadership The interplay of physical and financial layers in today's oil markets Giacomo Luciani IEA Energy Training Week Paris, April 5, 2013 The

More information

THE WORLD OIL MARKET. Mohan G. Francis

THE WORLD OIL MARKET. Mohan G. Francis THE WORLD OIL MARKET Mohan G. Francis With the Bush administration busily moving military forces to the Gulf region, the sense of an impending war has begun to make an impact on the world petroleum markets.

More information

TRADING PLACES inside the oil futures market. Karen Matusic

TRADING PLACES inside the oil futures market. Karen Matusic TRADING PLACES inside the oil futures market Karen Matusic Nymex Facts Biggest commodities futures market Volumes account for more than 10 times world oil production Started as a milk and butter exchange

More information

Oil Markets into 2006. Peter Davies Chief Economist, BP plc British Institute of Energy Economics London. 24 January, 2006

Oil Markets into 2006. Peter Davies Chief Economist, BP plc British Institute of Energy Economics London. 24 January, 2006 Oil Markets into 26 Peter Davies Chief Economist, BP plc British Institute of Energy Economics London. 24 January, 26 Outline Oil and energy today How did we get to here? Prospects for 26 Into the medium

More information

Recent Oil-Market Developments: Causes and Implications

Recent Oil-Market Developments: Causes and Implications Recent Oil-Market Developments: Causes and Implications Statement of Professor Robert J. Weiner Professor of International Business, Public Policy & Public Administration, and International Affairs, George

More information

Oil and Gas Prices. Oil and Gas Investor Summit London 17th-18th June 2014

Oil and Gas Prices. Oil and Gas Investor Summit London 17th-18th June 2014 Oil and Gas Prices Oil and Gas Investor Summit London 17th-18th June 2014 Oil Price Drowning in oil Economist, March 1999 $10 oil might actually be too optimistic. We may be heading for $5. Crude touches

More information

Room XXVI Palais des Nations Geneva, Switzerland. Oil Market Outlook. Eissa B. Alzerma Oil Price Analyst Petroleum Studies Department, OPEC

Room XXVI Palais des Nations Geneva, Switzerland. Oil Market Outlook. Eissa B. Alzerma Oil Price Analyst Petroleum Studies Department, OPEC UNCTAD Multi-Year Expert Meeting on Commodities and Development 2013 Recent developments and new challenges in commodity markets, and policy options for commodity-based inclusive growth and sustainable

More information

Lifting the Crude Oil Export Ban

Lifting the Crude Oil Export Ban September 2015 Lifting the Crude Oil Export Ban Explainer I: Crude Oil Export Ban Overview The Bipartisan Policy Center (BPC) prepared this overview as part of a series to promote greater understanding

More information

2015 Oil Outlook. january 21, 2015

2015 Oil Outlook. january 21, 2015 MainStay Investments is pleased to provide the following investment insights from Epoch Investment Partners, Inc., a premier institutional manager and subadvisor to a number of MainStay Investments products.

More information

CRUDE OIL PRICES: MARKET FUNDAMENTALS OR SPECULATION? by Paul Davidson, Editor, Journal of Post Keynesian Economics

CRUDE OIL PRICES: MARKET FUNDAMENTALS OR SPECULATION? by Paul Davidson, Editor, Journal of Post Keynesian Economics CRUDE OIL PRICES: MARKET FUNDAMENTALS OR SPECULATION? by Paul Davidson, Editor, Journal of Post Keynesian Economics Visiting Scholar, Schwartz Center For Economic Policy Analysis To be published in the

More information

Oil Markets Update- October 2015

Oil Markets Update- October 2015 SICO Research November 23, - October Crude prices remain low in October led by oversupply and weak economic indicators October has been a volatile month for crude prices; Brent reached USD 53.05/bbl in

More information

ICE Middle East Sour Crude Oil Futures Contract: FAQ

ICE Middle East Sour Crude Oil Futures Contract: FAQ ICE Middle East Sour Crude Oil Futures Contract: FAQ 1. Why are we launching a sour crude contract? To provide a hedging tool to accommodate risk management needs in the global market for sour crude oil.

More information

3/11/2015. Crude Oil Price Risk Management. Crude Oil Price Risk Management. Crude Oil Price Risk Management. Outline

3/11/2015. Crude Oil Price Risk Management. Crude Oil Price Risk Management. Crude Oil Price Risk Management. Outline 1 Phoenix Energy Marketing Consultants Inc. 2 Outline What is crude oil price risk management? Why manage crude oil price risk? How do companies manage crude oil price risk? What types of deals do companies

More information

Whither Oil Prices and Volatility?

Whither Oil Prices and Volatility? OIL PRICE VOLATILITY What Do We Know? Robert J. Weiner Professor of International Business, Public Policy & Public Administration, and International Affairs, George Washington University Membre Associé,,

More information

Crude Oil Prices after the OPEC Meeting

Crude Oil Prices after the OPEC Meeting 361st Regular Meeting for Briefing Research Report April 12, 2000 Crude Oil Prices after the OPEC Meeting Ken Koyama, Group Manager International Trend Analysis Group The Institute of Energy Economics,

More information

The shale revolution - impact on the global oil and gas market

The shale revolution - impact on the global oil and gas market The shale revolution - impact on the global oil and gas market Thina Margrethe Saltvedt, Senior Analyst, Macro/Oil March 2013 @ThinaSaltvedt Brief intro to the oil market Drivers of the oil price Short-term

More information

LNG Poised to Significantly Increase its Share of Global Gas Market David Wood February 2004 Petroleum Review p.38-39

LNG Poised to Significantly Increase its Share of Global Gas Market David Wood February 2004 Petroleum Review p.38-39 LNG Poised to Significantly Increase its Share of Global Gas Market David Wood February 2004 Petroleum Review p.38-39 For the past few years LNG has experienced high levels of activity and investment in

More information

The Crude Oil Pricing System: Features & Prospects

The Crude Oil Pricing System: Features & Prospects The Crude Oil Pricing System: Features & Prospects Dr Bassam Fattouh Oxford Institute for Energy Studies 29 March 2011 Presented at the Surrey Energy Economics Centre Speculation Versus Fundamentals Debate

More information

Oil Companies Capital Expenditure : Business Cycle Perspective

Oil Companies Capital Expenditure : Business Cycle Perspective 15 th U.S. China Oil & Gas Industry Forum Oil Companies Capital Expenditure : Business Cycle Perspective China National Petroleum Corporation: Zhen WANG September 17, 2015 Outline Business Cycle, Oil Price

More information

Topic 9: Energy Pricing and Trading in Financial Markets. () Global Energy Issues, Industries and Markets 1 / 41

Topic 9: Energy Pricing and Trading in Financial Markets. () Global Energy Issues, Industries and Markets 1 / 41 Topic 9: Energy Pricing and Trading in Financial Markets () Global Energy Issues, Industries and Markets 1 / 41 Introduction Energy prices determined in many ways E.g. long term contracts for natural gas

More information

Crude Oil: What every investor needs to know By Andy Hecht

Crude Oil: What every investor needs to know By Andy Hecht Crude Oil: What every investor needs to know By Andy Hecht Crude oil is considered by many to be the most important commodity market in the world. The value of crude oil affects almost every individual

More information

The divorce between Brent and the oil prices

The divorce between Brent and the oil prices The divorce between Brent and the oil prices Salvatore Carollo ENI For some years now, the price of oil has been out of control. None of the of the industry players either oil companies, producing or consuming

More information

You may be interested.

You may be interested. You may be interested. PIRINC has prepared the enclosed report, Energy Supply Risks: Perspectives in Light of Venezuelan Developments Until very recently, all discussion of energy supply risks has been

More information

Why Oil Reached $100 Two factors explain the rise in oil prices to $100. Movements of oil prices and the. dollar s exchange rate reflect declining

Why Oil Reached $100 Two factors explain the rise in oil prices to $100. Movements of oil prices and the. dollar s exchange rate reflect declining The B Y P HILIP K. VERLEGER, JR. Oil-Dollar Link The Fed, hedge funds, and why oil could hit $1 a barrel. THE MAGAZINE OF INTERNATIONAL ECONOMIC POLICY 888 16th Street, N.W. Suite 7 Washington, D.C. 20006

More information

Rush hour in Kolkata (formerly Calcutta), India. Between 1990 and 2000, the number of motor vehicles per capita more than doubled in four

Rush hour in Kolkata (formerly Calcutta), India. Between 1990 and 2000, the number of motor vehicles per capita more than doubled in four Rush hour in Kolkata (formerly Calcutta), India. Between 1990 and 2000, the number of motor vehicles per capita more than doubled in four Asia-Pacific nations: South Korea, the Philippines, India, and

More information

Commodity Trading. NRGI Reader March 2015. Converting Natural Resources into Revenues KEY MESSAGES

Commodity Trading. NRGI Reader March 2015. Converting Natural Resources into Revenues KEY MESSAGES NRGI Reader March 2015 Commodity Trading Converting Natural Resources into Revenues KEY MESSAGES Commodity sales transfer natural resources physical assets into revenues. The sales can generate a large

More information

Dated Brent: The pricing Benchmark for Asia-pacific Sweet crude Oil

Dated Brent: The pricing Benchmark for Asia-pacific Sweet crude Oil MARKET ISSUES: OIL Dated Brent: The pricing Benchmark for Asia-pacific Sweet crude Oil May 2011 Foreword by Jorge Montepeque, Global Editorial Director of Market Reporting MARKET ISSUES: OIL Platts Dated

More information

P R O F E S S I O N A L R E S P E C T I N T E G R I T Y D Y N A M I C E X C E L L E N C E BMD CRUDE PALM OIL FUTURES

P R O F E S S I O N A L R E S P E C T I N T E G R I T Y D Y N A M I C E X C E L L E N C E BMD CRUDE PALM OIL FUTURES P R O F E S S I O N A L R E S P E C T I N T E G R I T Y D Y N A M I C E X C E L L E N C E BMD CRUDE PALM OIL FUTURES Advantage & Opportunities A BRIEF HISTORY CPO futures launched since October 1980 by

More information

Europe s Refining Industry under Pressure Medium Term Outlook and Implications for Security of Supply

Europe s Refining Industry under Pressure Medium Term Outlook and Implications for Security of Supply Europe s Refining Industry under Pressure Medium Term Outlook and Implications for Security of Supply Network Oil & Gas Seminar Stockholm, 31 October 2012 Toril Bosoni About the IEA The IEA was established

More information

Agenda. Petroleum Management

Agenda. Petroleum Management Petroleum Management 1 Agenda Energy Advantage Background - Petroleum Fuels Market Petroleum Procurement Services Background - Hedging/Risk Management Canadian Petroleum Market Correlation and basis differential

More information

The Dubai Benchmark and Its Role in the International Oil Pricing System

The Dubai Benchmark and Its Role in the International Oil Pricing System Oxford Energy Comment March 2012 The Dubai Benchmark and Its Role in the International Oil Pricing System By Bassam Fattouh INTRODUCTION Dubai became the main price marker for the Gulf region by default

More information

Upward Trend in Crude Oil Prices since 1973

Upward Trend in Crude Oil Prices since 1973 Economic Insights Trends and Challenges Vol.III (LXVI) No. 4/2014 89-96 The Collapse of Crude Oil Prices: Cyclical Evolution or Market Manipulation? Haidar Ali Mohammed Al Dulaimi Lecturer, Ph.D., University

More information

Platts Oil Benchmarks & Price Assessment Methodology. October 4, 2012 - London

Platts Oil Benchmarks & Price Assessment Methodology. October 4, 2012 - London Platts Oil Benchmarks & Price Assessment Methodology October 4, 2012 - London Agenda Introduction and the role of benchmarks Platts price discovery process Global commodity markets outlook Platts MOC liquidity:

More information

Revisiting Global Energy Security. Girijesh Pant Jawaharlal Nehru University

Revisiting Global Energy Security. Girijesh Pant Jawaharlal Nehru University Revisiting Global Energy Security Girijesh Pant Jawaharlal Nehru University Global Age-Nation to Global Nation Economies are globalising. Globalising nation economies are integrating. Interoperability

More information

TEXT. Rosneft President, Igor Sechin presentation at the International Petroleum (IP) Week in London on 10-11 February 2015

TEXT. Rosneft President, Igor Sechin presentation at the International Petroleum (IP) Week in London on 10-11 February 2015 TEXT Rosneft President, Igor Sechin presentation at the International Petroleum (IP) Week in London on 10-11 February 2015 Greetings ladies and gentlemen We are, no doubt, are in a fairly acute crisis

More information

The Structure of Global Oil Markets

The Structure of Global Oil Markets B A C K G R O U N D E R OIL The Structure of Global Oil Markets June 2010 BACKGROUNDER: The Structure of Global Oil Markets WHAT ARE THE VARIOUS OIL TRADING STRUCTURES? Total world production of crude

More information

2014 BP Madrid forum on energy & sustainability BP 2014

2014 BP Madrid forum on energy & sustainability BP 2014 14 BP Madrid forum on energy & sustainability BP 14 Contents Global energy trends Liquid fuels Refining implications European focus Energy Outlook 35 BP 14 Primary energy consumption growth slows and the

More information

chapter: Oligopoly Krugman/Wells Economics 2009 Worth Publishers 1 of 35

chapter: Oligopoly Krugman/Wells Economics 2009 Worth Publishers 1 of 35 chapter: 15 >> Oligopoly Krugman/Wells Economics 2009 Worth Publishers 1 of 35 WHAT YOU WILL LEARN IN THIS CHAPTER The meaning of oligopoly, and why it occurs Why oligopolists have an incentive to act

More information

Jean-Yves Garnier Independent Consultant

Jean-Yves Garnier Independent Consultant Jean-Yves Garnier Independent Consultant JODI is much more than a database The JODI Databases Cooperation Harmonisation between organisations Image Coverage Cooperation between Countries and Organisations

More information

REPORT ON THE SECONDARY MARKET FOR RGGI CO 2 ALLOWANCES. Prepared By:

REPORT ON THE SECONDARY MARKET FOR RGGI CO 2 ALLOWANCES. Prepared By: REPORT ON THE SECONDARY MARKET FOR RGGI CO 2 ALLOWANCES Prepared By: March 2009 A. INTRODUCTION The primary market for RGGI allowances consists mainly of the auctions where allowances are initially sold.

More information

The price of West Texas Intermediate crude oil on the New York Mercantile Exchange reached $39.99 on February 27, 2003.

The price of West Texas Intermediate crude oil on the New York Mercantile Exchange reached $39.99 on February 27, 2003. 29 III. THE PRICING OF CRUDE OIL Leon Hess, whose oil company made more than $200 million by trading oil futures during the Persian Gulf crisis... said he longs for the days when oil company barons could

More information

Report on Pricing by the Energy Charter. The Report can be downloaded free of charge from: www.encharter.org

Report on Pricing by the Energy Charter. The Report can be downloaded free of charge from: www.encharter.org Oil and Gas Pricing Mechanisms: Past, Current and Future Trends Dr. Andrey A.Konoplyanik, Consultant to the Board, Gazprombank, and Professor, Russian State Oil & Gas University Presentation at the session

More information

Integrated Oil Companies

Integrated Oil Companies Integrated Oil Companies Loretta Bu Zhou Fang Suvayan Roy Patrick He Artur Shikhaleev Yang Zeng 1 Key Questions 2 Upstream, Midstream, Downstream, Equipment and Services Companies THE OIL SUPPLY CHAIN

More information

Producer Hedging the Production of Heavy Crude Oil

Producer Hedging the Production of Heavy Crude Oil Producer Hedging the Production of Heavy Crude Oil An oil producer sells its future production of heavy crude oil to a customer at an agreed-upon price today. The producer seeks to lock-in this price to

More information

CBO STAFF. UNDERSTANDING THE VOLATILITY OF OIL PRICES DURING THE IRAQ-KUWAlT CRISIS. January 1991

CBO STAFF. UNDERSTANDING THE VOLATILITY OF OIL PRICES DURING THE IRAQ-KUWAlT CRISIS. January 1991 CBO STAFF MEMORANDUM UNDERSTANDING THE VOLATILITY OF OIL PRICES DURING THE IRAQ-KUWAlT CRISIS January 1991 CONGRESSIONAL BUDGET OFFICE SECOND AND D STREETS, S.W. WASHINGTON, D.C. 205 15 This staff memorandum

More information

Oil and Natural Gas Outlook: Implications for Alaska The Alliance Meet Alaska. Remarks by Marianne Kah Chief Economist

Oil and Natural Gas Outlook: Implications for Alaska The Alliance Meet Alaska. Remarks by Marianne Kah Chief Economist Oil and Natural Gas Outlook: Implications for Alaska The Alliance Meet Alaska Remarks by Marianne Kah Chief Economist Cautionary Statement The following presentation includes forward-looking statements.

More information

The economic and energy scenarios for Latin America & the Caribbean from the perspective of the KPMG

The economic and energy scenarios for Latin America & the Caribbean from the perspective of the KPMG The economic and energy scenarios for Latin America & the Caribbean from the perspective of the KPMG Martiniano Lopes KPMG Partner Latin America Energy and Natural Resource Leader ARPEL Conference - Uruguay

More information

Oil Price and Korean Economy

Oil Price and Korean Economy Oil Price and Korean Economy April 17, 2015 Jaerang Lee - Contents - I. Oil Price Outlook II. Effects on Korean Economy III. Conclusion I. Oil Price Outlook Oil prices have lowered to around mid 50 dollars

More information

Changes in Supply of and Demand for Crude Oil: Implications for Oil Price

Changes in Supply of and Demand for Crude Oil: Implications for Oil Price Changes in Supply of and Demand for Crude Oil: Implications for Oil Price 1 Paul R. Kutasovic Economic Consultant and Professor, New York Abstract The rise in oil prices since the end of the 2007-09 recession

More information

The Global Economic Impacts of Oil Price Shocks

The Global Economic Impacts of Oil Price Shocks The Global Economic Impacts of Oil Price Shocks Presented to: Project LINK, United Nations New York, NY November 22, 2004 Presented by: Sara Johnson Managing Director, Global Macroeconomics Group 781-301-9115

More information

IMPACT PARAMETERS ON THE VOLATILITY OF THE WORLD OIL PRICE

IMPACT PARAMETERS ON THE VOLATILITY OF THE WORLD OIL PRICE IMPACT PARAMETERS ON THE VOLATILITY OF THE WORLD OIL PRICE Reinhard HAAS, Amela AJANOVIC, Hans AUER, Lukas KRANZL, Andreas MÜLLER, Gustav RESCH, Christian REDL, Lukas WEISSENSTEINER Institut für Elektrische

More information

The Energy Markets Peter C. Fusaro 1. Introduction This chapter introduces the energy markets from a risk management perspective.

The Energy Markets Peter C. Fusaro 1. Introduction This chapter introduces the energy markets from a risk management perspective. The Energy Markets Peter C. Fusaro 1 Introduction This chapter introduces the energy markets from a risk management perspective. Energy trading began in 1978 with the first oil futures contract on the

More information

The forward market for oil

The forward market for oil By Patrick Campbell of the Bank s Foreign Exchange Division, Bjorn-Erik Orskaug of the Bank s International Finance Division and Richard Williams of the Bank s International Economic Analysis Division.

More information

Oil & Gas Capital Expenditure Outlook 2013. GDGE0020TR / Published January 2013

Oil & Gas Capital Expenditure Outlook 2013. GDGE0020TR / Published January 2013 Oil & Gas Capital Expenditure Outlook 2013 GDGE0020TR / Published January 2013 Global Oil and Gas Capital Expenditure is Expected to Increase to US$XX Billion in 2013 The global oil and gas capital expenditure

More information

Standard Note: SN/SG/2106 Last updated: 28 January 2014 Author: Paul Bolton Section Social & General Statistics

Standard Note: SN/SG/2106 Last updated: 28 January 2014 Author: Paul Bolton Section Social & General Statistics Oil prices Standard Note: SN/SG/216 Last updated: 28 January 214 Author: Paul Bolton Section Social & General Statistics Oil prices peaked at almost $15 Dollars a barrel in July 28 and fell sharply in

More information

REGULATION OF THE GAS SUPPLY MARKET FREQUENTLY ASKED QUESTIONS

REGULATION OF THE GAS SUPPLY MARKET FREQUENTLY ASKED QUESTIONS REGULATION OF THE GAS SUPPLY MARKET FREQUENTLY ASKED QUESTIONS Why is it necessary to regulate gas supply in a free market? Manx Gas has a natural monopoly in the Isle of Man gas supply market. Given the

More information

Impact of low crude prices on refining. February 2015. Tim Fitzgibbon Agnieszka Kloskowska Alan Martin

Impact of low crude prices on refining. February 2015. Tim Fitzgibbon Agnieszka Kloskowska Alan Martin Impact of low crude prices on refining February 2015 Tim Fitzgibbon Agnieszka Kloskowska Alan Martin The recent fall in crude oil prices has coincided with both higher and lower profitability in the downstream

More information

Natural Gas: Winter 2012-13 Abundance! and Some Confusion

Natural Gas: Winter 2012-13 Abundance! and Some Confusion Natural Gas: Winter 2012-13 Abundance! and Some Confusion NASEO Winter Fuels Outlook Washington, D.C. October 10, 2012 Bruce B. Henning Vice President, Energy Regulatory and Market Analysis BHenning@icfi.com

More information

Oil Trading. Simon Basey / November 28, 2013

Oil Trading. Simon Basey / November 28, 2013 Oil Trading Simon Basey / November 28, 2013 What does IST do? Markets BP s equity crude oil, NGLs and natural gas Offers risk management products to third parties Imports crude oil and other feedstocks

More information

Book Review. The Divorce between Brent and the Oil Prices. Feb. 6 2012 - Energy. By Salvatore Carollo

Book Review. The Divorce between Brent and the Oil Prices. Feb. 6 2012 - Energy. By Salvatore Carollo Book Review Feb. 6 2012 - Energy The Divorce between Brent and the Oil Prices By Salvatore Carollo The Fondazione Eni Enrico Mattei (FEEM) is a non-profit, nonpartisan research institution devoted to the

More information

Mechanics of the Futures Market. Andrew Wilkinson

Mechanics of the Futures Market. Andrew Wilkinson Mechanics of the Futures Market Andrew Wilkinson Risk Disclosure Options and Futures are not suitable for all investors. The amount you may lose may be greater than your initial investment. Before trading

More information

GAO. COMMODITY FUTURES TRADING COMMISSION Trends in Energy Derivatives Markets Raise Questions about CFTC s Oversight

GAO. COMMODITY FUTURES TRADING COMMISSION Trends in Energy Derivatives Markets Raise Questions about CFTC s Oversight GAO For Release on Delivery Expected at 1:30 p.m. EDT Wednesday, October 24, 2007 United States Government Accountability Office Testimony Before the Subcommittee on General Farm Commodities and Risk Management,

More information

OIL MARKET STRUCTURE AND PRICING CRUDE OIL AND OIL PRODUCTS MARKETING AND PRICING: WHAT IS THE PRICE OF CRUDE OIL?

OIL MARKET STRUCTURE AND PRICING CRUDE OIL AND OIL PRODUCTS MARKETING AND PRICING: WHAT IS THE PRICE OF CRUDE OIL? 2011 2 nd International Conference on Economics, Business and Management IPEDR vol.22 (2011) (2011) IACSIT Press, Singapore OIL MARKET STRUCTURE AND PRICING CRUDE OIL AND OIL PRODUCTS MARKETING AND PRICING:

More information

GAO COMMODITY FUTURES TRADING COMMISSION. Trends in Energy Derivatives Markets Raise Questions about CFTC s Oversight

GAO COMMODITY FUTURES TRADING COMMISSION. Trends in Energy Derivatives Markets Raise Questions about CFTC s Oversight GAO United States Government Accountability Office Report to Congressional Addressees October 2007 COMMODITY FUTURES TRADING COMMISSION Trends in Energy Derivatives Markets Raise Questions about CFTC s

More information

FRONTLINE LTD. INTERIM REPORT JULY - SEPTEMBER 2005. Highlights

FRONTLINE LTD. INTERIM REPORT JULY - SEPTEMBER 2005. Highlights FRONTLINE LTD. INTERIM REPORT JULY - SEPTEMBER Highlights Frontline reports net income of $73.8 million and earnings per share of $0.99 for the third quarter of. Frontline reports nine month results of

More information

TRADING STRATEGIES FOR DERIVATIVES MARKET

TRADING STRATEGIES FOR DERIVATIVES MARKET TRADING STRATEGIES FOR DERIVATIVES MARKET 1 AGENDA Definition of Derivatives Origin of Derivatives Basic types of Derivatives Benefits of Trading Derivatives Trading Strategies 2 Definition of Derivatives

More information

Energy Prices. Presented by: John Heffernan

Energy Prices. Presented by: John Heffernan Global Wholesale Energy Prices Presented by: John Heffernan Energy in 2012 In 2012, the growth in Energy consumption slowed in 2012 90% of this growth came from China & India Consumption & production of

More information

State Heating Oil & Propane Program Final Report Winter 2004/2005

State Heating Oil & Propane Program Final Report Winter 2004/2005 Commonwealth of Massachusetts Division of Energy Resources State Heating Oil & Propane Program Final Report Winter 2004/2005 May 2005 Mitt Romney Governor Kerry Healey Lt. Governor Beth Lindstrom Director,

More information

U.S. Crude Oil Pricing Analysis

U.S. Crude Oil Pricing Analysis Alan Stevens, President Stancil & Co. 400 E. Las Colinas Boulevard Suite 700 Irving, Texas 75039 214.688.0255 www.stancilco.com Table of Contents I. Introduction and Summary of Findings... I-1 Historical

More information

Energy Daily. Energy Daily Outlook. Market Commentary. Daily Close Price Changes

Energy Daily. Energy Daily Outlook. Market Commentary. Daily Close Price Changes Energy Daily Energy Daily 22 October 2015 Brought to you by Phillip Futures Pte Ltd (A member of PhillipCapital) Daily Close Price Changes Product (NYMEX) 21-Oct 1d chg % Change WTI Dec'15 45.2-1.09-2.4%

More information

Reading: Chapter 19. 7. Swaps

Reading: Chapter 19. 7. Swaps Reading: Chapter 19 Chap. 19. Commodities and Financial Futures 1. The mechanics of investing in futures 2. Leverage 3. Hedging 4. The selection of commodity futures contracts 5. The pricing of futures

More information

Platts Forward Curve-Oil

Platts Forward Curve-Oil [OIL ] METHODOLOGY AND SPECIFICATIONS GUIDE Platts Forward Curve-Oil (Latest Update: ) OIL Derivatives methodology guide 2 Market Methodology 2 GENERAL ASSESSMENT PRINCIPLES 2 Disclosure 2 ASIA PACIFIC

More information

OPEC Annual Statistical Bulletin

OPEC Annual Statistical Bulletin 2015 OPEC Annual Statistical Bulletin Organization of the Petroleum Exporting Countries 2015 OPEC Annual Statistical Bulletin Organization of the Petroleum Exporting Countries th 50 EDITIO N Team for

More information

All the information, tables and graphs used in this report are reserved. They cannot be used without being referenced.

All the information, tables and graphs used in this report are reserved. They cannot be used without being referenced. All the information, tables and graphs used in this report are reserved. They cannot be used without being referenced. T.R. ENERGY MARKET REGULATORY AUTHORITY (EMRA) Petroleum Market Department ANKARA,

More information

DME 2009 - The Year in Review

DME 2009 - The Year in Review DME 2009 - The Year in Review 2009 was a positive year for the DME characterised by four significant developments. Firstly, liquidity has increased with trading volumes achieving a 69% year-on-year increase

More information

Global Energy Dynamics: Outlook for the Future. Dr Fatih Birol Chief Economist, IEA 18 June 2014

Global Energy Dynamics: Outlook for the Future. Dr Fatih Birol Chief Economist, IEA 18 June 2014 Global Energy Dynamics: Outlook for the Future Dr Fatih Birol Chief Economist, IEA 18 June 2014 The world energy scene today Some long held tenets of the energy sector are being rewritten Countries are

More information

A View from the Top. An Interview with Ian Taylor, President and Chief Executive Officer of Vitol. By Walt Lukken

A View from the Top. An Interview with Ian Taylor, President and Chief Executive Officer of Vitol. By Walt Lukken A View from the Top By Walt Lukken An Interview with Ian Taylor, President and Chief Executive Officer of Vitol 38 Futures Industry www.futuresindustry.com Ian Taylor is a man on the move. As president

More information

Energy Briefing: Global Crude Oil Demand & Supply

Energy Briefing: Global Crude Oil Demand & Supply Energy Briefing: Global Crude Oil Demand & Supply November 6, 215 Dr. Edward Yardeni 516-972-7683 eyardeni@ Debbie Johnson 48-664-1333 djohnson@ Please visit our sites at www. blog. thinking outside the

More information

JAMES A. BAKER III INSTITUTE FOR PUBLIC POLICY RICE UNIVERSITY

JAMES A. BAKER III INSTITUTE FOR PUBLIC POLICY RICE UNIVERSITY JAMES A. BAKER III INSTITUTE FOR PUBLIC POLICY RICE UNIVERSITY Testimony of Kenneth B. Medlock III, PhD James A. Baker, III, and Susan G. Baker Fellow in Energy and Resource Economics, and Senior Director,

More information

Crude Oil Trading and

Crude Oil Trading and Exercises & Interactive Trading Simulation included! Crude Oil Trading and Price Risk Management Maximize Trading Profits and Manage Risk Effectively in a Volatile Market 18th 22nd May 2015, Kuala Lumpur,

More information

Evaluating Emerging Crude Feedstocks. Hege Dammen Spiral Software Crude Oil Summit London, 14 May 2013

Evaluating Emerging Crude Feedstocks. Hege Dammen Spiral Software Crude Oil Summit London, 14 May 2013 Evaluating Emerging Crude Feedstocks Hege Dammen Spiral Software Crude Oil Summit London, 14 May 2013 Outline Introduction to Spiral Software The Major Changes in the Global Crude Flow Evaluate Arbitrage

More information

An Analysis of Global Trade in Terephthalic Acid and its Salts

An Analysis of Global Trade in Terephthalic Acid and its Salts Page 1 12/22/2014 An Analysis of Global Trade in Terephthalic Acid and its Salts The paper summarises the results of an analysis of global trade in Terephthalic Acid. Global trade is obtained by collating

More information

Falling Oil Prices and US Economic Activity: Implications for the Future

Falling Oil Prices and US Economic Activity: Implications for the Future Date Issue Brief # I S S U E B R I E F Falling Oil Prices and US Economic Activity: Implications for the Future Stephen P.A. Brown December 2014 Issue Brief 14-06 Resources for the Future Resources for

More information

CONTRACT SPECIFICATIONS FUTURES FUTURES CONTRACT BRENT CRUDE OIL WTI CRUDE OIL. Trading system code BRNT WTIO

CONTRACT SPECIFICATIONS FUTURES FUTURES CONTRACT BRENT CRUDE OIL WTI CRUDE OIL. Trading system code BRNT WTIO CONTRACT SPECIFICATIONS FUTURES FUTURES CONTRACT BRENT CRUDE OIL WTI CRUDE OIL Trading system code BRNT WTIO Trading Hours 08h30 to 17h00 South African time. Admin period from 17h00 to 17h15. (Monday to

More information

July 2008. part is granted.

July 2008. part is granted. July 2008 This report is in the public domain. part is granted. Authorization to reproduce it in whole or in While permission to reprint this publication is not necessary, the citation should be: Interagency

More information

The Pricing of Crude Oil

The Pricing of Crude Oil Stephanie Dunn and James Holloway* Arguably no commodity is more important for the modern economy than oil. This is true in terms of both production and financial market activity. Yet its pricing is relatively

More information

CME Group 2012 Commodities Trading Challenge. Competition Rules and Procedures

CME Group 2012 Commodities Trading Challenge. Competition Rules and Procedures Competition Rules and Procedures CME Group with assistance from CQG and the University of Houston, is sponsoring a commodities trading competition among colleges and universities. Students will compete

More information

The Fuel and Vehicle Trends Report January 31, 2014

The Fuel and Vehicle Trends Report January 31, 2014 ISSN 1948-2388 The Fuel and Vehicle Trends Report This report is a summary of the latest fuel prices and other oil industry key statistics. In addition, this report provides the latest trends in vehicle

More information

Short-Term Energy Outlook Market Prices and Uncertainty Report

Short-Term Energy Outlook Market Prices and Uncertainty Report February 2016 Short-Term Energy Outlook Market Prices and Uncertainty Report Crude Oil Prices: The North Sea Brent front month futures price settled at $34.46/b on February 4 $2.76 per barrel (b) below

More information

Short-Term Energy Outlook Market Prices and Uncertainty Report

Short-Term Energy Outlook Market Prices and Uncertainty Report July 2014 Short-Term Energy Outlook Market Prices and Uncertainty Report Crude Oil Prices: After an upward move in mid-june, crude oil prices retreated close to previous levels. The North Sea Brent front

More information

What are futures contracts?

What are futures contracts? The Futures Market Introduction and Mechanics (c) 2002-2013 Gary R. Evans. May only be used for non-profit educational purposes only without permission of the author. What are futures contracts? A futures

More information