Global oil stock overhang will not abate soon

2016 ◽  
Keyword(s):  
Storage Capacity ◽  
Oil Price ◽  
Limiting Factor ◽  
Content Type ◽  
Spot Prices ◽  
Oil Market ◽  
Internal Storage ◽  
Forward Prices ◽  
Oil Inventories

Subject Oil inventories and price swings. Significance Growth in oil inventories has slowed markedly, indicating that the supply-demand balance in the oil market is changing from a position of oversupply to one of shortage. However, any rise in spot prices will close the gap with forward prices ('flatten the contango'), making storage uneconomic. This will release stocks to the market, acting as a self-limiting factor on any oil price recovery. Impacts By encouraging the return of shuttered production and stored oil, rising prices will trigger a dampening effect. Excess crude will head to refineries, turning surplus crude into surplus products. Contango will open opportunities for trading houses to leverage their internal storage capacity.

Storage plays will help keep oil price low globally

2015 ◽  
Keyword(s):  
Storage Capacity ◽  
Oil Production ◽  
Futures Market ◽  
Oil Price ◽  
Content Type ◽  
Oil Storage ◽  
Oil Markets ◽  
The Us ◽  
Internal Storage

Subject Current opportunities for oil storage plays. Significance Oil markets are now in their third month in contango -- when prices for future delivery exceed spot rates. The collapse in the price of crude under the weight of the US production surplus has made it profitable for traders to buy oil now and sell it forward on the futures market even after accounting for the costs of storage and insurance. However, the speed with which shale production can be taken off- and online makes storage plays uncertain. Impacts Contango will open opportunities for trading houses to leverage their internal storage capacity. A 3% drop in global oil production will be enough to erase the current opportunities in storage plays. Despite remaining negligible, the return of Libyan exports would add to the surplus, adding to the profitability of storage plays. Rising future prices could attract new investment to shale production, bringing it back online and perpetuating the supply glut.

Qatar can ride out gas price collapse

2016 ◽  
Keyword(s):  
Liquefied Natural Gas ◽  
Public Infrastructure ◽  
Pricing Policy ◽  
Content Type ◽  
Spot Prices ◽  
Oil Market ◽  
Lock In ◽  
Gas Price ◽  
Change Concerns

Subject Qatar gas pricing policy. Significance With LNG spot prices dropping in parallel with oil prices, buyers have pressed Qatar to renegotiate the terms of long-term liquefied natural gas (LNG) contracts. In response, Qatar has proved surprisingly flexible, particularly to India's Petronet, seeking to lock in long-term relationships with customers ahead of a potential glut in supply that will put pressure on LNG prices whatever happens in the oil market. Impacts Lower LNG revenue will put immediate pressure on Qatar's public finances. Some major public infrastructure projects may be scaled back or delayed, impacting contractors. LNG suppliers with less market clout than Qatar are likely to face even greater pressure on their contracts. Declining supply outlook and climate change concerns may let Qatar find itself in an enviable position once again by 2020 or sooner.

Oil is rebalancing but US shale will cap prices

2017 ◽  
Keyword(s):  
Market Structure ◽  
Oil Prices ◽  
Oil Price ◽  
Content Type ◽  
Oil Market

Subject Oil price outlook. Significance The emergence of a backwardated oil market structure, with prices for future delivery lower than spot rates, suggests the oil market is beginning to rebalance. However, whether it will be sustained is dependent on continued OPEC and non-OPEC compliance with agreed cuts. Impacts The price-responsive nature of US shale production creates a ceiling on oil prices between 50 and 60 dollars per barrel. OPEC's cuts mean it risks losing share to US shale if prices rise, but it cannot risk a retreat; this dilemma may undermine OPEC compliance. The next OPEC meeting will take place in Vienna on November 30 and whether the OPEC-non-OPEC cuts should be extended will be discussed.

Modeling and forecasting oil price risk: the role of implied volatility index

2017 ◽  
Vol 44 (6) ◽  
pp. 1003-1016 ◽  
Author(s):  
Anupam Dutta
Keyword(s):  
Crude Oil ◽  
Information Content ◽  
Price Volatility ◽  
Oil Price ◽  
Base Line ◽  
Content Type ◽  
Oil Market ◽  
Oil Price Volatility ◽  
Volatility Index ◽  
The Us

Purpose While numerous empirical studies have tried to model and forecast the oil price volatility over the years, such attempts using the crude oil volatility index (OVX) rarely exist. In order to conceal this void, the purpose of this paper is to investigate whether including OVX in the realized volatility (RV) models improve the accuracy of predictions. Design/methodology/approach At the empirical stage, the authors employ several measures to frame the RV of crude oil futures returns. In particular, the authors use three different range-based RV estimators recommended by Parkinson (1980), Rogers and Satchell (1991) and Alizadeh et al. (2002), respectively. Findings The findings reveal that the information content of crude OVX helps to provide more accurate volatility predictions in comparison to the base-line RV model which contains only historical oil volatilities. Besides, the forecast encompassing test further suggests that the modified RV model (when OVX is introduced in the base-line RV model) forecast encompasses the conventional RV forecast in majority of the cases. Practical implications Since forecasting oil price volatility plays a vital role in portfolio optimization, derivatives pricing, optimum asset allocation decisions and risk management, the findings of this study thus carry important implications for energy economists, investors and policymakers. Originality/value This paper adds to the existing literature, since it is one of the initial studies to explore whether OVX is informative about the realized variance of the US oil market returns. The findings recommend that the information content of oil implied volatilities should be taken into account when modeling the US oil market volatility. In addition, range-based measures should be utilized while estimating the RV.

Markets are overreacting to US price and rates risks

2021 ◽  
Keyword(s):  
Federal Reserve ◽  
Futures Markets ◽  
The United States ◽  
Oil Price ◽  
Bond Markets ◽  
Crude Oil Price ◽  
Bond Yields ◽  
Content Type ◽  
Bond Yield ◽  
Ongoing Support

Significance The continuation of the modest manufacturing downturn follows the recent report of slower third-quarter GDP growth. Despite slower growth, bond markets are challenging an attempt by the Federal Reserve (Fed) to delink tapering from tightening by bringing forward their forecasts for rate increases: futures markets are pricing in two 25-basis-point rate hikes by end-2022. Impacts Equities are at a record high in the United States; providing ongoing support for this, real US bond yields remain in negative territory. The Brent crude oil price is near its highest since 2014; further upside will be limited but it is likely to stay high well into 2022. Germany’s ten-year bond yield, negative since April 2019, has risen by 40 basis points since end-August and will soon turn positive.

OPEC+ deal bodes well for oil price stability

2021 ◽  
Keyword(s):  
Oil Price ◽  
Price Stability ◽  
Content Type

Headline INTERNATIONAL: OPEC+ deal supports oil price stability

Exploring the inflationary effect of oil price in the US

2019 ◽  
Vol 13 (1) ◽  
pp. 60-76 ◽  
Author(s):  
Amine Lahiani
Keyword(s):  
Growth Rate ◽  
Structural Breaks ◽  
Oil Prices ◽  
Oil Price ◽  
Inflation Expectations ◽  
Oil Price Shocks ◽  
Price Shocks ◽  
Content Type ◽  
The Us ◽  
The Relationship

PurposeThe purpose of this paper is to explore the effect of oil price shocks on the US Consumer Price Index over the monthly period from 1876:01 to 2014:04.Design/methodology/approachThe author uses the Bai and Perron (2003) structural break test to split the data sample into sub-periods delimited by the computed break dates. Afterwards, the author uses the quantile treatment effects over the full sample and then, by including sub-periods dummies to accommodate the selected structural breaks that drive the relationship between inflation and oil price growth.FindingsThe findings include a decreased transmission effect of oil price changes on inflation in recent years; a varied elasticity of inflation to the growth rate of oil prices across the distribution; and, finally, evidence of asymmetry in the relationship between the growth rate of oil prices and inflation, with a higher transmission mechanism for decreasing rather than increasing oil prices.Practical implicationsPolicymakers should remain alert to monitoring potential inflation increases and should take precautionary measures to anchor inflation expectations, because inflation reacts differently to positive and negative oil price shocks. Moreover, authorities should consider the asymmetric reaction of inflation to oil price shocks to adopt an appropriate monetary policy strategy to achieve the price stability target.Originality/valueThe paper used a quantile regression model with structural breaks, which has not yet been used in the literature.

Measuring performance of government-supported drug warehouses using DEA to improve quality of drug distribution

2020 ◽  
Vol 17 (4) ◽  
pp. 567-581
Author(s):  
Anuj Dixit ◽  
Srikanta Routroy ◽  
Sunil Kumar Dubey
Keyword(s):  
Supply Chain ◽  
Storage Capacity ◽  
Generic Drugs ◽  
Drug Distribution ◽  
Operational Cost ◽  
Fill Rate ◽  
Time Efficiency ◽  
Productivity Level ◽  
Content Type ◽  
Temperature Controlled

PurposeDrug warehouses (DWs) play a crucial role in drug distribution of government-supported healthcare supply chain as it controls both the cost and responsiveness of the logistics activities. The current study proposes a methodology using data envelopment analysis (DEA) to estimate the performance along different dimensions and was applied to 30 government-supported DWs.Design/methodology/approachThis study employs DEA to evaluate the performance and relative technical efficiency of DWs. In this research, four inputs and six outputs are identified based on intensive literature review and discussion with all stakeholders of DWs. The inputs are warehouse storage capacity, temperature-controlled storage capacity, number of skilled employees and operational cost, while the outputs are fill rate, number of generic drugs, volume of drugs, consumption points, inventory turns ratio and time efficiency.FindingsResults show that 30% DWs operate at the most productive scale size with 100% efficiency level while 47% DWs have a significant possibility for further enhancement in productive efficiency and 23% DWs should diminish their operational size to increase their productivity level. It was also found that achieving 100% operational productivity along warehouse space capacity needs significant effort, whereas other three inputs, namely temperature-controlled capacity, number of skilled employees and operational cost, require comparatively less effort. Similarly, it was observed that the performance along the fill rate and time efficiency is satisfactory, whereas the performance along other fours output variables (i.e. number of generic drugs, volume of drugs, consumption points and inventory turns ratio) needs to be improved.Practical implicationsThe findings offer insights on the inputs and outputs that significantly contribute to efficiencies so that inefficient DWs can focus on these factors.Originality/valueAlthough many issues related to DEA have been widely researched and reported, but no literature has been found for analysis of DWs in general and government-supported DWs specifically to find out efficiencies for supply chain performance improvement.

Impact of oil volatility shocks on global emerging market stock returns

2017 ◽  
Vol 13 (5) ◽  
pp. 578-591 ◽  
Author(s):  
Probal Dutta ◽  
Md Hasib Noor ◽  
Anupam Dutta
Keyword(s):  
Stock Returns ◽  
Emerging Market ◽  
Equity Returns ◽  
Oil Price ◽  
Financial Assets ◽  
Stock Market Returns ◽  
Content Type ◽  
Volatility Index ◽  
Jump Model ◽  
Oil Price Risk

Purpose The purpose of this paper is to investigate whether the crude oil volatility index (OVX) plays any key role in explaining the trend in emerging market stock returns from a global standpoint. Design/methodology/approach At the empirical stage, different forms of the GARCH-jump model have been estimated. Findings The findings confirm the effects of OVX on equity returns. In addition, the results document that there exist time-varying jumps in the stock market returns. Besides, the impacts of OVX shocks appear to be symmetric. The analysis further shows that the magnitude of OVX impact is marginally bigger than that of the conventional oil price shocks. Originality/value Since various financial assets are traded on the basis of oil and equity markets, investors, for instance, could use the findings of this study for taking proper investment decisions and gaining better portfolio diversification benefits. Additionally, policymakers could utilize the results to develop effective measures and strategies in order to minimize the oil price risk.

scholarly journals “Shale Revolution” in the United States as the Main Driver of the World Oil Market Transformation

2019 ◽  
Vol 12 (6) ◽  
pp. 71-93
Author(s):  
S. A. Zolina ◽  
I. A. Kopytin ◽  
O. B. Reznikova
Keyword(s):  
United States ◽  
Crude Oil ◽  
Oil Production ◽  
The United States ◽  
Oil Price ◽  
Oil Market ◽  
Oil Exports ◽  
The World ◽  
Oil Sector ◽  
The U.S

In 2018 the United States surpassed Saudi Arabia and Russia to become the largest world oil producer. The article focuses on the mechanisms through which the American shale revolution increasingly impacts functioning of the world oil market. The authors show that this impact is translated to the world oil market mainly through the trade and price channels. Lifting the ban on crude oil exports in December 2015 allowed the United States to increase rapidly supply of crude oil to the world oil market, the country’s share in the world crude oil exports reached 4,4% in 2018 and continues to rise. The U.S. share in the world petroleum products exports, on which the American oil sector places the main stake, reached 18%. In parallel with increasing oil production the U.S. considerably shrank crude oil import that forced many oil exporters to reorient to other markets. Due to high elasticity of tight oil production to the oil price increases oil from the U.S. has started to constrain the world oil price from above. According to the majority of authoritative forecasts, oil production in the U.S. will continue to increase at least until 2025. Since 2017 the tendency to the increasing expansion of supermajors into American unconventional oil sector has become noticeable, what will contribute to further strengthening of the U.S. position in the world oil market and accelerate its restructuring.  

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