A view on commodities
- Thread starter DSM
- Start date
tel ka to lagta hai paani hi nikal jayega
falling crude price is it not indicating that global economy is not doing well.
how can the oil producing majors afford such a fall. why they are not taking corrective action by cutting production. what are their intrest to allow crude to plunge????????
should developing nations like India rejoice due to cheap crude or start thinking seriously as what will be the use of cheap crude when global economy is going to shrink. will it not effect our exports.
unable to understand what are the causes & what will be the ultimate effect.
may be DSM ji has an answer. (Anyhow as a trader feeling very bad as I couldnot ride the mega trend).
falling crude price is it not indicating that global economy is not doing well.
how can the oil producing majors afford such a fall. why they are not taking corrective action by cutting production. what are their intrest to allow crude to plunge????????
should developing nations like India rejoice due to cheap crude or start thinking seriously as what will be the use of cheap crude when global economy is going to shrink. will it not effect our exports.
unable to understand what are the causes & what will be the ultimate effect.
may be DSM ji has an answer. (Anyhow as a trader feeling very bad as I couldnot ride the mega trend).
You have to differ between what the big oil guys (Countries) compare to the world economics want. They play there own game and do not care about world economics. Would you if you if you would have the power they have at this time include the ISSI problem and the Russian problem and the friend ship with USA and so on? That game is not so easy seen in public and given to the public as Oil runs the world.
Hi Sangram,
Falling crude is due to many factors.... For our country, falling crude is good for our economy as lower crude = lower import bill, lower trade deficit, lower manufacturing cost and higher profits for companies. For countries who depend upon crude exports and if it makes up a larger part of their economy, it is not good news though, and these countries include Russia, Saudi Arabia, Venezuela, etc.... Will post tomorrow on crude politics.
Falling crude is due to many factors.... For our country, falling crude is good for our economy as lower crude = lower import bill, lower trade deficit, lower manufacturing cost and higher profits for companies. For countries who depend upon crude exports and if it makes up a larger part of their economy, it is not good news though, and these countries include Russia, Saudi Arabia, Venezuela, etc.... Will post tomorrow on crude politics.
tel ka to lagta hai paani hi nikal jayega
falling crude price is it not indicating that global economy is not doing well.
how can the oil producing majors afford such a fall. why they are not taking corrective action by cutting production. what are their intrest to allow crude to plunge????????
should developing nations like India rejoice due to cheap crude or start thinking seriously as what will be the use of cheap crude when global economy is going to shrink. will it not effect our exports.
unable to understand what are the causes & what will be the ultimate effect.
may be DSM ji has an answer. (Anyhow as a trader feeling very bad as I couldnot ride the mega trend).
falling crude price is it not indicating that global economy is not doing well.
how can the oil producing majors afford such a fall. why they are not taking corrective action by cutting production. what are their intrest to allow crude to plunge????????
should developing nations like India rejoice due to cheap crude or start thinking seriously as what will be the use of cheap crude when global economy is going to shrink. will it not effect our exports.
unable to understand what are the causes & what will be the ultimate effect.
may be DSM ji has an answer. (Anyhow as a trader feeling very bad as I couldnot ride the mega trend).
tel ka to lagta hai paani hi nikal jayega
falling crude price is it not indicating that global economy is not doing well.
how can the oil producing majors afford such a fall. why they are not taking corrective action by cutting production. what are their intrest to allow crude to plunge????????
should developing nations like India rejoice due to cheap crude or start thinking seriously as what will be the use of cheap crude when global economy is going to shrink. will it not effect our exports.
unable to understand what are the causes & what will be the ultimate effect.
may be DSM ji has an answer. (Anyhow as a trader feeling very bad as I couldnot ride the mega trend).
falling crude price is it not indicating that global economy is not doing well.
how can the oil producing majors afford such a fall. why they are not taking corrective action by cutting production. what are their intrest to allow crude to plunge????????
should developing nations like India rejoice due to cheap crude or start thinking seriously as what will be the use of cheap crude when global economy is going to shrink. will it not effect our exports.
unable to understand what are the causes & what will be the ultimate effect.
may be DSM ji has an answer. (Anyhow as a trader feeling very bad as I couldnot ride the mega trend).
As per data now they can withstand till 32 dollar (profit breakeven point)....
Below this they face problem with profitability and ongoing projects will be in soup...
Yep Dan, For Saudi, there is not much adverse impact on production cost due to huge proven reserves and existing oil infrastructure. But where they will be hit is financially - They are after all not to the most astute nation as far as handling finances are concerned. (There are many poor people in Saudi Arabia - and I am talking about the local population. The oil funds are wasted (distributed among many princly clans and only little goes into development and reserves)) The govt. gives many subsidies (from the era of high crude prices which are wasted) and Saudi Arabia will also feel the pinch. Surely.
@DSM
No problem for Saudi Arabia. Take care / Dan
No problem for Saudi Arabia. Take care / Dan
Oil Politics
In retrospect, everything becomes crystal clear... and post the huge decline in crude prices, there are reasons given as to why it is so. Well if only all the analyst and experts knew of this even two months in advance, all would be sitting on millions and billions of dollars in profit. The fact is that while experts can be held to question for not being able to gauge the market trend given the fact that they have access to all information and data, even as traders, we have failed to trade the trend, and left wondering as to how this wonderful opportunity passed us by while in plain sight. So here's the post-facto reasoning for the decline in crude :
* Often, it is said that the global economies have been faltering and this has led to lower demand for crude and the reason for fall in crude prices. This is only partially true. The fact is that there has been a higher demand for crude compared to previous years, but the demand has been GROWING at a lower rate. Simply stated, if the demand for crude has been growing at say 3.5% p.a, the growth for demand has been reduced to say 1.80% (Figures are for explanation only)
* A major reason for decline in crude prices can be actually attributed to newer technologies adopted especially by/in the US and Canada which is called Fracking/Horizontal drilling. Earlier, oil used to be extracted by drilling vertically. However, this method left huge untapped pool of oil below the earth. By using horizontal drilling method, oil has been extracted at many places that were off limits for economical drilling. Also, the use of tar sands (especially in Canada - where Reliance had taken up stake (which is reported to be now sold) which has been used to extract oil from tar) This has led to huge production of crude/oil especially in the US - which otherwise has been a large importer of crude from OPEC.
* Alternative energy sources also is another reason for lower crude demand / prices. For example, there are now large solar parks, wind farms, even in India. If crude prices are high, these renewable energy sources can be used to produce energy. Considering the environmental issues, governments encourage use of these to produce electricity. In countries such as Germany, this has been quite common. With the lower price of solar panel due to economies of scale, homeowners find it cheap to install solar panels, and produce their energy needs. Not only this, they can sell it as well. In Germany individual houses are linked to energy grids, where homeowners sell excess energy to the electric companies.
* Crude as like other commodities has become a trading asset. There are huge speculative bets by hedge funds, investors etc. These are now being unwound.
All these above have contributed to fall in crude prices among other reasons......
*
In retrospect, everything becomes crystal clear... and post the huge decline in crude prices, there are reasons given as to why it is so. Well if only all the analyst and experts knew of this even two months in advance, all would be sitting on millions and billions of dollars in profit. The fact is that while experts can be held to question for not being able to gauge the market trend given the fact that they have access to all information and data, even as traders, we have failed to trade the trend, and left wondering as to how this wonderful opportunity passed us by while in plain sight. So here's the post-facto reasoning for the decline in crude :
* Often, it is said that the global economies have been faltering and this has led to lower demand for crude and the reason for fall in crude prices. This is only partially true. The fact is that there has been a higher demand for crude compared to previous years, but the demand has been GROWING at a lower rate. Simply stated, if the demand for crude has been growing at say 3.5% p.a, the growth for demand has been reduced to say 1.80% (Figures are for explanation only)
* A major reason for decline in crude prices can be actually attributed to newer technologies adopted especially by/in the US and Canada which is called Fracking/Horizontal drilling. Earlier, oil used to be extracted by drilling vertically. However, this method left huge untapped pool of oil below the earth. By using horizontal drilling method, oil has been extracted at many places that were off limits for economical drilling. Also, the use of tar sands (especially in Canada - where Reliance had taken up stake (which is reported to be now sold) which has been used to extract oil from tar) This has led to huge production of crude/oil especially in the US - which otherwise has been a large importer of crude from OPEC.
* Alternative energy sources also is another reason for lower crude demand / prices. For example, there are now large solar parks, wind farms, even in India. If crude prices are high, these renewable energy sources can be used to produce energy. Considering the environmental issues, governments encourage use of these to produce electricity. In countries such as Germany, this has been quite common. With the lower price of solar panel due to economies of scale, homeowners find it cheap to install solar panels, and produce their energy needs. Not only this, they can sell it as well. In Germany individual houses are linked to energy grids, where homeowners sell excess energy to the electric companies.
* Crude as like other commodities has become a trading asset. There are huge speculative bets by hedge funds, investors etc. These are now being unwound.
All these above have contributed to fall in crude prices among other reasons......
*
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