| Topic: | Re:OIL Prices | |
| Posted by: | Sebastian Smeck | |
| Date/Time: | 18/12/14 12:55:00 |
| As for low oil prices it is pretty simple OPEC made the decision not to bow down to the Saudis one of the dominant producers but alongside that you also have the US who are now the world biggest producer who have invested billions of dollars in the last 5 years to increase the level of production therefore although the low prices hurt them it would still not be too beneficial to the US if OPEC was to cut production down too quickly. On a shale gas front I see this all being a bit of a hype and I do not think we are going to produce anywhere near the volumes that companies and scientists are projecting. As for natural gas in Europe it is a monopolised market unlike the US the major difference being in the US it tends to be more pushed towards weather and usage hence for example why the widowmaker spread is so popular. In Europe it is more based on supply and demand with Russia being the main powerhouse. When it comes to stockpiling it more depends if the market is in backwardation or contango. Contango being where future prices are higher than the spot price and backwardation being the reverse. Obviously it only makes sense to stockpile product in a market that is in contango. fyi I am a physical oil trader for a large firm. |