X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Oil prices - What next? - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Sep 2, 2011

    Oil prices - What next?

    Perhaps no other commodity generates as much interest as crude oil. The strength of crude prices left everyone aghast in the recent past. The driving events were unrest in Middle East and North Africa, OPEC inertia to raise output and most importantly, the oil speculations.

    And then happened an event that bucked the trend. The U.S and European debt crisis eased the stub born price rise. It didnít take long for the ripple effect to pass through. Within a month, the demand in the U.S has slowed down leading to a rise in the crude oil inventory. This, along with expectation of resumed oil supply from Libya, has in turn pulled down crude prices in a way that they witnessed biggest fall since the month of May. However, knowing the notoriety of oil prices, will it be sensible to expect this trend to stay?

    By simple law of economics, the oil prices should just depend on demand and supply. But unfortunately, the speculations take the better of them, especially in future markets. The same led us to witness the level of US$ 147 a barrel in the year 2008.

    Oil prices are a play of multitude of factors. And quantifying the effect of each is impractical. However, amongst the current set, we will try here to assess some of the impacts of major recent events.

    One might expect the recent downgrade of U.S debt to cause a global economic slowdown which could translate into lower fuel demand. Speculative impacts apart; we believe that the downgrade of U.S will have a negative long term impact on dollar. And one of the impacts of weaker dollar should be higher oil prices (beacause oil prices are quoted in terms of USD).

    One may argue for a downward pressure on oil prices in the near future on account of slowdown in U.S and Europe, a break from Libyan crisis and OPECís assurance to increase oil supply along with the release of emergency oil reserves. However, there are other factors working in the favor of strong prices.

    We expect oil prices to receive support from geopolitical tensions recently sparked by Israel and Iran, which are two of the major key oil producers. Last but not the least, there is an obvious tightness as far as demand and supply dynamics are concerned. The outlook for major emerging economies like India and China is still positive, which will be the key sources of global economic growth and the demand for oil from them is expected to be strong. Hence, we expect the recent slide in oil prices to be temporary.

     

     

    Equitymaster requests your view! Post a comment on "Oil prices - What next?". Click here!

    1 Responses to "Oil prices - What next?"

    Earl Richards

    Sep 2, 2011

    OPEC, Libya and the laws of supply and demand are not responsible for high gasoline and oil prices. The oil price is dictated by the fraudulent "round-trip" trades of the "dark pool" trading in the Intercontinental Exchange Exchange (ICE) in Atlanta. The international Big Oil/big banking cabal owns ICE. ICE operates outside of US law. The Commodity Futures Trading Commission has no jurisdiction over ICE, bribed by Big Oil. ICE's energy traders and speculators can ratchet-up the oil price anytime thay feel like it, for their profits and on the behalf of Big Oil, through the use of "round-trip" trades. Google the "Global Oil Scam." ICE is a super Enron. Oil is too critical a resource to be controlled and manipulated by greedy corporations, greedy traders, greedy refiners and greedy speculators.

    Like 
      
    Equitymaster requests your view! Post a comment on "Oil prices - What next?". Click here!
     

    More Views on News

    GAIL: A Good Show (Quarterly Results Update - Detailed)

    Mar 27, 2017

    GAIL (India) Ltd has announced results for the quarter ended December 2016. reported 9.4% year on year (YoY) decline in sales, while bottom-line grew 45.4% YoY.

    ONGC: Higher Realisations on Crude Support Performance (Quarterly Results Update - Detailed)

    Mar 17, 2017

    ONGC has announced results for the quarter ended December 2016. The company has reported 9.2 % year on year (YoY) growth in sales, while bottom-line grew 197% YoY.

    Oil India Ltd: A weak quarter (Quarterly Results Update - Detailed)

    Jan 24, 2017

    Oil India Limited announced results for the quarter ended September 2016. The company has reported an 6.5% and 7.8% Year on Year (YoY) decline in sales and net profit respectively during the quarter.

    GAIL: A Robust Quarter (Quarterly Results Update - Detailed)

    Dec 3, 2016

    GAIL (India) Ltd has announced results for the quarter ended September 2016. The company has reported 16 % year on year (YoY) decline in sales, while bottom-line grew 180% YoY.

    ONGC: Lower Write-offs Support Performance (Quarterly Results Update - Detailed)

    Nov 3, 2016

    ONGC has announced results for the quarter ended September 2016. The company has reported 10.3 % year on year (YoY) decline in sales, while bottom-line grew 6.3% YoY.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    S&P BSE OIL & GAS


    Aug 16, 2017 (Close)

    S&P BSE OIL & GAS 5-YR ANALYSIS

    COMPARE COMPANY

    MARKET STATS