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The Green List: Oil Volatility is On Its Way!

  • May 11, 2021
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      Today, very little has changed, despite the substantial investment
    in renewable energy and alternative methods of generating motive power
    for everything from central heating to transport, and the value of the
    sticky black stuff is still inexorably dependent on the utterings of
    government leaders.




      Over the past year, to consider oil to have been a volatile
    commodity is an understatement, its value having dropped into negative
    equity around one year ago for the first time in history, and the
    ensuing lockdowns and travel bans having created lower prices in the
    Western markets whilst demand in South and South East Asia has remained
    very high.




      Today, crude oil is absolutely under the microscope. Even the OPEC
    countries are publicly discussing its immediate future, with Ihsan Abdul
    Jabbar, the Oil Minister of Iraq, OPECs second largest producer, noted
    that oil could probably remain around US$65 a barrel.




      Standard data is scheduled for release within the next 24 hours in
    the United States, in the form of the weekly inventories from the
    American Petroleum Institute, which will be compared to the unexpected
    climb last week to 90,000 barrels, however this is a bland, routine
    spreadsheet exercise.




      The matter of real interest is that commercial consumers and
    distributors will likely be assessing a huge increase in purchasing
    refined petroleum products such as gasoline for cars, and perhaps more
    specifically, kerosene for aircraft, meaning that more crude oil will be
    bought by refineries, as the perpetually locked down European Union and
    its Trans-Atlantic neighbours on the entire North American continent
    begin to lift travel restrictions.




      A combination of pent-up will to travel after a year of blocked
    borders and a desperate travel industry wanting to regenerate its lost
    earnings would result in skies full of aircraft, especially as the
    summer begins and the lure of cut-price tourism gives those seeking
    refuge from the four walls of constraint.




      Companies such as Wizz Air, easyJet and Ryanair have all been
    advertising cheap flights recently, and have been targeting members of
    the public who would look to fly within Europe as soon as the travel ban
    is lifted. This means lots of reservations and therefore a demand for
    fuel.




      The European Commission put forward a proposal on Monday this week
    to expand the list of countries whose citizens may visit the European
    Union for nonessential reasons and its president, Ursula von der Leyen
    tweeted “Time to revive EU tourism industry & for cross-border
    friendships to rekindle – safely. We propose to welcome again vaccinated
    visitors & those from countries with a good health situation.”




      The decision to lift further restrictions for tourism and
    non-essential travel will be up to the member states and the proposal
    was discussed at length yesterday.




      India has been a huge consumer of oil in recent weeks, and despite
    Iraq‘s oil minister’s predictions, there is speculation within India
    that it may rise to $80 by the summer of this year, substantially higher
    than Mr Abdul Jabbars prediction of $65.




      India, the worlds third-largest oil importer, has increased its use
    so dramatically recently that OPEC+, out of its own necessity, has
    intervened in the oil market on the supply side of the equation to
    offset the oil demand.




      As of April 6, the EIA saw global oil demand at 97.7 million bpd
    this year. Compared to Brent prices that were near $65 per barrel in
    March, the EIA sees not much movement in the price of Brent, estimating
    $65/barrel in Q2 2021, $61 per barrel in H2 2021, and even worse–$60 per
    barrel in 2022.




      The US Energy Information Administration (EIA) has overseen a
    global oil demand at 97.7 million barrels per day this year as of April
    6, the EIA Compared to Brent prices that were near $65 per barrel in
    March, the EIA sees not much movement in the price of Brent, estimating
    $65/barrel in Q2 2021, $61 per barrel in H2 2021, and even worse–$60 per
    barrel in 2022, which is a contrasting forecast to what the market
    analysts and OPEC commentators are expecting!