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Thread: Global oil demand and future prices

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    Regular Member G.O'Rilla's Avatar
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    Default Global oil demand and future prices

    I just thought that you might find this of interest (from the IEA). Apologies if it a bit long winded.

    Basically there is an accelerated drop in global demand which will continue giving lower crude oil prices which will eventually filter through to lower pump prices. However, pump prices are linked to distillate demand and supply, not necessarily the crude oil price. Global economic slow down will lower distillate demand. Higher stocks lower prices...........

    • August global oil supply fell by 1.0 mb/d to 86.8 mb/d on North Sea maintenance, the BTC pipeline outage and lower OPEC supply. Non OPEC output is revised by -180 kb/d for 2008 and by -85 kb/d for 2009, with hurricane outages impeding 2H08 supply. Non-OPEC growth including OPEC NGL is now 580 kb/d in 2008 and 1.56 mb/d in 2009.
    • OPEC crude supply in August fell by 195 kb/d to 32.5 mb/d on field and pipeline outages in Iraq, Angola, Libya and Nigeria, while effective spare capacity rose from 1.5 mb/d to 1.9 mb/d. The ‘call’ on OPEC is revised up to 32.2 mb/d for 3Q08 and 31.7 mb/d for 4Q08. This report went to press ahead of the OPEC 9 September meeting in Vienna.
    • Hurricane activity in the US Gulf of Mexico results in a 1.4 mb/d downward revision to US refinery crude throughput in September, to an average of 13.9 mb/d. Global September crude runs could decline by 1.3 mb/d from August. OECD crude runs are forecast to average 37.4 mb/d in September, their lowest level since October 2002.
    • OECD stocks rose by 47 mb in July to 2,646 mb. A large, unseasonal crude build from a revised June base and weaker demand leave end-July OECD cover at 54.5 days. Higher OECD end-June stocks now imply a 380 kb/d OECD stockbuild in 2Q08 versus last month’s estimate of flat second-quarter stocks, and a seasonal 2Q average build of 0.9 mb/d.
    • Forecast global oil demand has been lowered for both 2008 and 2009 following weaker deliveries in the OECD. World demand averages 86.8 mb/d in 2008 (+0.8% or +0.7 mb/d versus 2007 and 100 kb/d lower than previously estimated) and 87.6 mb/d in 2009 (+1.0% or +0.9 mb/d year-on-year and 140 kb/d lower than in our last report).
    • Benchmark crude futures continued their downward slide in August, approaching $100/bbl in early September, as fundamentals eased. Weaker OECD demand and higher stocks dominated sentiment, while markets have so far shrugged off Hurricanes Gustav and Ike, though the latter could yet defer post-Gustav supply recovery
    .

    Don't be too hard on the oil companies - no-one really makes any money out of refining or distribution - the margins are extremely thin (that's why many hundreds of fuel stations close each year). The money is made on extraction and trading.

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    Regular Member steve1975l's Avatar
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    Didn't Shell set a record for the highest reported annual profit for a UK listed company?

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    Default

    I don't think that many people have a huge problem with the 'petrol station' -as they are a small business trying to turn a profit.

    What problem people have is the fact the the oil companies (eg Shell, BP, ESSO etc) bleat on about costs and prices and how difficult it all is, and then make the profits that they do. I say profits and not sales values.

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    Regular Member G.O'Rilla's Avatar
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    You're right, but they don't make any real money out of refining and selling the stuff and no business is going to pursue a policy of selling at a loss.

    I don't like the oil companies grossly inflated profits any more than you do, especially when I get screwed big time on fees and forced to reduce them year on year or stop doing business. I was just trying to give everyone a global picture which I thought would be helpful.

    High pump prices are entirely due to Uncle Gordon and Auntie Alistair plus supply and demand in the world

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    I understand market forces, and how there has to be some tax on fuel, but VAT on tax?

    OPEC is the only legal cartel that I am aware of. In any other industry it would be declared illegal and Gov'ts would act to disband it.

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    How much is fuel in the U.K. at the mo ?

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    Quote Originally Posted by G.O'Rilla View Post
    Don't be too hard on the oil companies - no-one really makes any money out of refining or distribution - the margins are extremely thin (that's why many hundreds of fuel stations close each year). The money is made on extraction and trading.
    This is of course a pretty standard accountancy fiddle. Break the business down into little pieces and pretend that one bit makes a profit and the other a loss when in reality it's still just 1 big business (and one which makes a whacking great profit).

    Remember the royal mail argument for closing half the post offices lately? Post offices make a loss apparently - it's only moving the mail around the country that makes a profit. Depends where you allocate the costs and margins of course eh?

    Agreed that vat and duty don't help but the recent hikes in fuel prices are all down to the big oilies choosing how to milk the market.

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    Regular Member G.O'Rilla's Avatar
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    ....and in most countries, transfer pricing across borders is illegal........

    Just don't agree with you but I'll never get you to see the other balanced side of the coin. Of course they are in business to make money - they have shareholders. Oil companies are no greedier than any other company. Governments are the greedy ones who milk the end user because he has little choice
    Last edited by G.O'Rilla; 13th October 2008 at 16:46. Reason: lousy spelling

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    Quote Originally Posted by G.O'Rilla View Post
    Of course they are in business to make money - they have shareholders.
    So do banks
    Maybe Gordon should think about a spot of nationalisation?

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    Regular Member G.O'Rilla's Avatar
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    No they don't. have you been living in a cave for the last 6 months?

    Banks lose money - oil companies make money. You will see a decline in profits as the crude oil price declines and the resultant margins on extraction decline. It costs the same to extract oil from a particular field no matter what the selling price and varies from field to field.

    Edit - the above applies if you were talking about profits. If you were talking about shareholders, then - yes! Apologies if any offence given
    Last edited by G.O'Rilla; 13th October 2008 at 18:49.

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