Skip to main content

Crude Oil trend :-)

Crude oil has been showing a dramatic pricing movements this year... It is not the first time crude oil's stability has been hurt, a lot many times it keeps on changing... Crude oil is a dollar denominated commodity, for sure the prices of dollar make an impact on its prices... 

There was a time when prices reached 140$ a barrel, so the price of one barrel is around 60$


The balance of demand and supply is tight with daily demand of roughly 86 million barrels per day, almost the same level as daily supply.

Some of the major issues are:

1. Dollar weakness and funds

 

  • A combination of weaker performance in other asset classes and expectations of continued strength across the commodities complex has drawn in investors and speculative funds, providing further support for the market.
  • An added incentive for them has been the weakness of the dollar against other major currencies, which makes dollar-denominated commodities relatively cheap.
  • This made a rise in prices of crude oil... 
2. OPEC STORY
  • The Organization of the Petroleum Exporting Countries (OPEC) has been at the forefront of those citing speculation and a weak dollar as the reason for higher prices, saying it is pumping enough oil to keep the market balanced.
  • Saudi Arabia, the biggest OPEC producer, is expected to raise output close to 9.5 million barrels per day (bpd) in June up from around 9.1 million bpd in May.
3. Oil Output reduction resulted in sky high prices
  • Iraq's output has been disrupted by years of sanctions and then war. Sanctions have also limited exploration in Iran and violence has interrupted flows in Nigeria.
  • The biggest OPEC producers already prohibit foreign operators from accessing their oil reserves.
  • Non-OPEC Russia, the world's second biggest oil exporter, has also been limiting foreign involvement in its upstream while its output has stagnated.
4. Rise in Demand

  • High prices have begun to erode demand, but continued growth in China and other emerging economies is expected to offset the impact of any fall in developed countries.
  • While high taxes reduce demand in some developed economies, subsidies spur consumption in emerging economies.
  • In the developed world, some governments are considering reducing taxes, while emerging economies, struggling with the growing burden of subsidies, have started to lift them.
How are oil prices calculated..??

Commodity traders are responsible for oil prices by bidding on oil futures contracts.

 There are many factors they look at when developing the bids that create oil prices:

  • Current supply in terms of output, especially the production quota set by OPEC
  • Oil reserves, including what is available in  refineries and what is stored at the reserves
  • Oil demand, particularly from the U.S. 
Higher crude oil prices directly affect the cost of gasoline, home heating oil, manufacturing and electric power generation. How much? According to the EIA , 96% of transportation relies on oil, 43% of industrial product, 21% of residential and commercial, and (only) 3% of electric power. 



Comments

M_U_K_U_N{U_V} said…
Sir ji fer bhi hame to petrol 50 appx. me hi milta hai jab ki org. iski price half ho chukki hai ye galat baat hai ke nahi??

Popular posts from this blog

All they want is a pleasant experience for us

My experiences with this gloomy world continue. I may sound repetitive and annoying, but there's a reality check for all of us who think that the world is fine as long as the Covid-19 doesn't hit us and our paychecks continue to flow into the banks. 
The store in the picture is amongst the busiest in the area, always remains full and explodes with the people on the Saturdays. A typical brand in a store, let's say a Van Heusen makes about ₹200,000 to ₹220,000 of sales on the weekend. As of today, the store does about ₹10,000 to ₹15,000 of revenues of the same brand, and the footfalls are not even 5 per cent of what they otherwise used to witness. Ironically, a store of this size would have 8-10 salesman with an average basic salary of ₹10,000 to ₹12,000 a month and the balance they earn (~₹5,000-₹7,500) is all linked to the sales of the brand. For them, purchases from the store cover-up for the livelihood, savings and the investments and there are no concept of "work fr…

The new age crisis

I don't know who I should credit or discredit, but last couple of years have been incredible for India and it's people and it is not in a good way. Disappointed to note that the politics has completely taken over us and the ideological differences have reached our houses and personal devices. We are not only fighting amongst us on difference of opinion, but also ensuring that the dissent against a majoritarian view is killed to its core, to the extent that the voice is never raised against any impending thoughts or disagreements we may have. 
I am deeply saddened by the fact that most of us now are actually made to believe that the opinion shared by a larger section of society is deemed right since it has the weight of a the population around, and in case you have reservations to even contest that, you are probably branded as a threat. 
I may have had little problems with CAA or NRC if it wasn't done for the political incentives and the treatment of the people not sharing th…