The global business cycle and speculative demand for crude oil

PurposeThis paper aims to better understand if speculative activity is a factor or even the main factor in the run-up of oil prices in the spot market, particularly in the recent price bubble that occurred in the period from mid-2003 to 2008.Design/methodology/approachThe methodology used is based on an existing vector autoregressive model proposed by Kilian and Murphy (2014), which is a structural model of the global market for crude oil that accounts for flow demand and flow supply shocks and speculative demand oil shocks.FindingsFrom the output of the authors’ structural model, the authors ruled out speculation as a factor of rising oil prices. The authors have found instead that the rapid oil demand caused by an unexpected increase in the global business cycle is the most accurate culprit. Despite the change of perspective in the speculative component, the authors’ conclusions concur with the findings of Kilian and Murphy (2014) and others.Originality/valueAs far as the authors are aware, this is the first time that a study has used as a spread oil variable, a speculative component of the real price, replacing the oil inventories considered by Kilian and Murphy (2014). Another contribution is that the model used allows estimating traditional oil demand elasticity in production and oil supply elasticity in spread movements, casting doubt on existing models with perfect price-inelastic output for crude oil.

Study on the effect of pre-treatment of Oil Palm Shell (OPS) as coarse aggregate using hot water 50-°C and room temperature water 28-°C to lightweight concrete strength

With a rapidly growing population, the need for homes is increasing, which means the demand for housing material is also increasing in Indonesia. On the other hand, as the largest producer of palm oil in the world, Indonesia produces almost half of the world’s palm oil inventories. Oil palm shells (OPS) are agricultural solid end products from palm oil manufacturing processes. In this research, the use of OPS waste as substitution materials for making concrete is investigated. In order to be used as structural building material, some mechanical properties of materials must achieve the requirements of the National Standard SNI. The general objective of this research is to understand the effect of the pretreatment process on OPS aggregate on the mechanical behaviour of lightweight concrete. To do so, first, pre-treatment on the OPS is performed using hot water (50°C) and room temperature water (26-28°C). Second, by using the most effective mixed proportions from previous research in laboratory, pre-treated OPS is used to cast concrete. Third, some experimental tests are carried out to evaluate its mechanical properties, such as: concrete compressive strength, flexural strength and tensile strength (split test). Then, behaviour from both different treatments are compared and discussed. Finally, this research can determine which method gives better result for the application of OPS as biosource substituent material.

US shale industry will withstand post-Harvey oil glut

Significance The Port Arthur Refinery is the largest in the United States. Tropical Storm Harvey is estimated to have closed nearly one-quarter of the country’s refining capacity, which is concentrated along the Gulf of Mexico coast. While petrol futures have risen because of the curtailment of supply, crude prices have fallen due to fears of oil inventories building up before the restoration of demand from refinery operations. Persistently weak oil prices pose a threat to the US shale oil industry’s finances and expansion plans. Impacts Oil-dependent economies like Saudi Arabia, Russia and Venezuela will have to budget for sustained low oil prices. Consumers will enjoy relatively low fuel prices after the post-Harvey price spike subsides, freeing up spending power. Low oil prices will slow the market rollout of new electric and hybrid-electric model cars debuting in 2018-19.

Global oil stock overhang will not abate soon

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.

Elevated US oil inventories will keep prices low

Headline UNITED STATES: Oil inventories will keep prices low

Global oil price is set to stay subdued in 2015

US crude oil inventories show no signs of decline despite the slump in the operational rig count.