Archive for the ‘Article’ Category

“Oilmageddon” recession ? (ICP Forecast as of 10 February 2016)

Wednesday, February 10th, 2016

The summary of market info as of 10 Feb 2016 is as follows:

  • IEA reported that global oil surplus will be bigger than previously estimated in the first half, increasing the risk of further price losses, as OPEC members Iran and Iraq boost production while demand growth slows.
  • As the dollar strengthens, it makes oil more expensive for buyers paying with other currencies, especially for China as the world’s biggest importer, which can weigh on demand and prices.
  • Based on Minas Bloomberg Price data (15 Dec 2015-5 Feb 2016), Minas is now looking supported around the $24 level. Unfortunately, the glut of supply remains and will likely remain a cap on prices. This pattern would keep price trapped between the early February high of $31.53 and the support mentioned above at $24.69 for a few more weeks.  If price is unable to break above $31.53 the probability of  low Minas price remains higher over the next month or two.

Feb 2016 1

  • For the first time, EIA forecast the same numbers for both WTI and Brent for the rest of the year. EIA forecasts WTI at $37.52 for 2016, while Brent at $37.43/bbl for 2016.

Based on the graph, we estimate SLC will be stable to $28.17/bbl in February 2016 and will average at $ 31.81/bbl for full year 2016.

Feb 2016

Disclaimer: The material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Opinions expressed are our current opinions as of the date appearing on this material only and would be updated every month.

Become lower for even longer (ICP forecast as of 11 Dec 2015)

Saturday, December 12th, 2015

The summary of market info as of 11 Dec 2015 is as follows:

  • OPEC members failed to agree on oil production ceiling in the 4th Dec meeting, after Iran rejected any production cut proposal until they can restore 1 million bopd output after the removal of international sanctions next year.
  • In the commodity market, net-long position dropped to the lowest level since September 2010. It seems market still wait and see for the next six months since there will be no cut in production to provide support for the market.
  • Currently the Asian market is very competitive since the major destination of crude export from the middle east is going to Asia region. This pressures the SLC price as it was reflected since September 2015, the SLC price is slightly lower the WTI.
  • EIA forecasts WTI at $48.91 for 2015 and $50.79/bbl for 2016, while Brent at $52.94/bbl and $55.67/bbl for 2016.

Based on the graph, we estimate SLC will be down to $36.90/bbl in December 2015 and will average $ 49.95/bbl for full year 2015.

Dec 2015

Disclaimer: The material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Opinions expressed are our current opinions as of the date appearing on this material only and would be updated every month.

The Eagle has landed (ICP forecast as of 11 Nov 2015)

Wednesday, November 11th, 2015

The summary of market info as of 11 Nov 2015 is as follows:

  • OPEC sees oil prices have bottomed by below reasons:
    • Demand is going up in 2015 and 2016, as predicted by EIA
    • Non-OPEC supply is going down
    • U.S oil production is shrinking
    • Drilling has slowed to a standstill
    • Inventory is burning off slowly
  • It is also reflected in commodity market, the net-long position in West Texas Intermediate crude rose 20 percent in the week ended Nov 3.
  • 2016 is the year of transition for market re-balancing. Demand is expected to grow around 1.2-1.5 million barrels a day, and on the other side Iranian oil comes back into the market. It could be a tough year.
  • EIA forecasts WTI at $49.97 for 2015 and $51.25/bbl for 2016, while Brent at $53.92/bbl and $56.17/bbl for 2016.

Based on the graph, we estimate SLC will stable to $42.37/bbl in November 2015 and will average $ 50.16/bbl for full year 2015.

Nov 2015

Disclaimer: The material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Opinions expressed are our current opinions as of the date appearing on this material only and would be updated every month.

Unconfirmed Floor Price (ICP forecast as of 8 Oct 2015)

Thursday, October 8th, 2015

The summary of market info as of 8 Oct 2015 is as follows:

  • EIA reported U.S. crude oil production will continue to  decline through August 2016 attributable to unattractive economic returns in some areas and as anticipated hurricane-related production disruptions in the Gulf of Mexico. 
  • Meanwhile, Saudi Arabia cuts pricing for November oil sales to Asia and the U.S. to keep its barrels competitive with rival suppliers amid sluggish demand.
  • The oil market faces many uncertainties heading into 2016, including the pace and volume at which Iranian oil reenters the market, the strength of oil consumption growth, and the responsiveness of non-OPEC production to low oil prices.
  • EIA forecasts WTI at $49.54 for 2015 and $53.50/bbl for 2016, while Brent at $53.97/bbl and $58.50/bbl for 2016.

Based on the graph, we estimate SLC will stable to $43.42/bbl in October 2015 and will average $ 50.71/bbl for full year 2015.

Oct 2015

Disclaimer: The material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Opinions expressed are our current opinions as of the date appearing on this material only and would be updated every month.

Waiting for Saudi’s position (ICP forecast as of 11 Sept 2015)

Friday, September 11th, 2015

The summary of market info as of 11 Sept 2015 is as follows:

  • The North Sea and Nigeria will ship the most crude in more than three years in October, adding to downward pressure on oil prices just as demand wanes from refiners shutting down for seasonal maintenance
  • Iran has given a discount for their crude to regain market share in Asia and ramp up the output. The additional supply from Iran will hit the market as early as the first quarter of 2016.
  • OPEC’s uncertain mood was apparent at a Gulf Cooperation Council meeting in Doha (Sept 10). Saudi Arabian Oil Minister declined to comment in that meeting on the crude market or prices.
  • EIA forecasts WTI at $49.23 for 2015 and $53.57/bbl for 2016, while Brent at $54.07/bbl and $58.57/bbl for 2016.

Based on the graph, we estimate SLC will stable to $44.08.53/bbl in September 2015 and will average $ 51.19/bbl for full year 2015.

Sept 2015

Disclaimer: The material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Opinions expressed are our current opinions as of the date appearing on this material only and would be updated every month.

Unfavorable Future (Coal Price Forecast as of 17 August 2015)

Monday, August 17th, 2015

the summary of coal market info as of 17 August 2015 is as follows:

  • After China, India as the third-biggest consumer, looks to dramatically reduce overseas purchases in the coming years.
  • Low coal, oil and gas prices could persist for quite a while, but there is an important difference between these two commodities; demand for oil continues to grow while coal was dependent on the growing of Chinese steel industries.
  • Looking from coal futures trend below, on October 2012 market still expected coal future price to grow. However, since the beginning of this year, market seems to have no expectation, as the trend is going flat for the upcoming years.
 

Coal Futures trend up to 15 Aug 2015

Based on the graph, we estimate Indonesian Coal Price reference (HBA /Harga Batubara Acuan) will be  $59.53/bbl in Sept’ 2015 and will average $ 61.64/bbl for full year 2015.

HBA August 2015

Disclaimer: The material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Opinions expressed are our current opinions as of the date appearing on this material only and would be updated every month.

Cutting production is a must ! (ICP forecast as of 11th August 2015)

Tuesday, August 11th, 2015

The summary of market info as of 11 August 2015 is as follows:

  • OPEC pumped the most crude last month in more than three years as Iran restored output to the highest level from 32,300 barrels a day in July to 2.86 million a day, the highest since international sanctions were strengthened in 2012.
  • Price falls amid broader commodity decline as China’s central bank devalues currency, bolstered concern that the world’s second-biggest economy will slow.
  • If there is no evidence of cutting production in the U.S. or OPEC, even though there is an evidence of increased demand, it won’t be enough to boost the price significantly.
  • EIA forecasts WTI at $49.62 for 2015 and $54.2/bbl for 2016, while Brent at $54.40/bbl and $59.42/bbl for 2016.

Based on the graph, we estimate SLC will down to $45.53/bbl in August 2015 and will average $ 52.05/bbl for full year 2015.

August 2015

Disclaimer: The material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Opinions expressed are our current opinions as of the date appearing on this material only and would be updated every month.

 

Getting hit from all angles (ICP forecast as of July 2015)

Wednesday, July 8th, 2015

The summary of market info as of 8 July 2015 is as follows:

  • Oil slumped the most since March amid speculation that :

    – The Greek crisis prompted investors to eschew riskier assets.

    – How China will restore investor confidence after the Shanghai Composite slumped since mid-June.

    – Nuclear deal with Iran will be reached soon in Vienna. Market speculated that Iran will try to get that into the market as quickly as possible, even if it triggers a price collapse.

  • For the first time in almost seven months, America’s shale drillers put rigs in oil fields back to work, and they’re doing it at a lower price.

  • Saudi Arabia cut pricing for August oil sales of its Arab Light crude grade to Asia (the main market) as it seeks to defend sales amid a global glut.
  • EIA forecasts WTI at $55.51 for 2015 and $62.04/bbl for 2016, while Brent at $60.15/bbl and $67.00/bbl for 2016.

 Based on the graph, we estimate SLC will be down to $56.84/bbl in July 2015 and will average $ 56.04/bbl for full year 2015.

July 2015

Disclaimer: The material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Opinions expressed are our current opinions as of the date appearing on this material only and would be updated every month.

 

It’s a matter on market share not price control (ICP forecast as of June 2015)

Wednesday, June 10th, 2015

The summary of market info as of 9 June 2015 is as follows:

  • OPEC Meeting on 5th of June 2015, agreed not to cut the production. It seems they choose to collapse oil prices and trying to squeeze out US Shale-oil producers., even though they are not a swing producer anymore.
  • However, shale-oil producer has proved surprisingly resilient at lower prices. Break-even costs for U.S. shale production dropped 15 to 30 percent in recent months, while the production from each well has increased as much as 30%.
  • The contest for market share is proving more important than price. The competition is intensifying because each producers is eager to sell more oil even as world demand slows, to secure their market share.
  • EIA forecasts that Brent prices will average $61/bbl in 2015 and $67/bbl in 2016, The 2016 price forecast is $3/b lower than in last month’s STEO. While WTI prices in both 2015 and 2016 are expected to average $5/b less than the Brent.

Based on the graph, we estimate SLC will be down to $61.59/bbl in June 2015 and will average $ 58.96/bbl for full year 2015.

June 2015

Disclaimer: The material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Opinions expressed are our current opinions as of the date appearing on this material only and would be updated every month.

 

Recovery is not strong enough (ICP forecast as of 12 May 2015)

Tuesday, May 12th, 2015

The summary of market info as of 11 May 2015 is as follows:

  • The higher oil price in April is a respond to the declining oil production scenario in the U.S. It was reflected by the number of active rigs operating, which was the fewest since September 2010. The projection of increasing storage capacity in China and geo-politic  issue in the middle east are other factors.
  • The concern is, if prices climb high enough, it will re-stimulate the output and boost the rig count and pressure down the price again.
  • OPEC plans to meet on June 5, to stabilize crude prices. However, it will be very difficult for OPEC to changed their mind, not to cut the production, especially since oil price has rebounded.
  • EIA forecasts that Brent prices will average $60.8/bbl in 2015 and $70.5/bbl in 2016, while WTI prices expected to be $54.3/bbl in 2015 and $65.6/bbl in 2016.

Based on the graph, we estimate SLC will increase to $64.94/bbl in May 2015 and will average $ 62.17/bbl for full year 2015.

May 2015

Disclaimer: The material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Opinions expressed are our current opinions as of the date appearing on this material only and would be updated every month.