Current Oil Price

[biffvernon]

So what? Never mind what the figures or whose figures, demand and supply are always equal. Price see to that!

[johnhemming2]

It depends upon your definitions. If you have temporary storage and you count that which goes in and that which goes out then the definitions are different. It is useful additional information.

[PS_RalphW]

Storage acts as a buffer. Global storage is a few billion barrels, if you include strategic reserves. Not all storage is equal, some of it is refined product, ready to ship directly customer, but most is oil of variable grade and quality. Not all storage can be pumped overnight, a bit like NS gas storage, it can only be pumped as fast as the pipelines allow.

The world consumes 80Mbpd (approx,) so 3 billion barrels is nominally about a month's supply. At any one time, a lot of oil (hundreds of millions of barrels ) is in transit, in tankers or in pipelines, as it is moved about the planet. This is not really storage, as it needs to be constantly replenished. This leads to a 'minimum operating level' for stored oil, below which local shortages can occur due to logistical problems, the oil is in the wrong place at the wrong time.
Storage has increased in the last few years. Storing oil itself costs money, and so adds to the total cost in the long run, and most storage is either strategic, by governments, or speculative.

[raspberry-blower]

WTI is trading at$42.20 having briefly breached the $42 barrier
Brent at $49

Meanwhile this article from Bloomberg shows the extent of the retrenchment in the oil & gas sector

[raspberry-blower]

Brent now trading below $47

WTI drops below $41

[emordnilap]

Oil glut may continue for another year.

The International Energy Agency just came out with a new forecast saying that while current oil prices have the demand for oil products increasing rapidly, there is still so much over-production that the oil glut is expected to last for another year or more before supply/demand comes back into balance. The return of Iran to unfettered production would not help matters.

[AutomaticEarth]

Brent at 46.15

WTI at 40.94

But the USA and UK are doing well, apparently......


Fuel hasn't dropped much here, but then again, I drive a lot less these days....

[johnhemming2]

A cut in energy prices etc should give a generalised boost to the economy. It normally does.

[biffvernon]

A cut in energy prices etc should give a generalised boost to the economy. It normally does.

Why?

I mean to say, the volume of oil produced has not changed much so the activity associated with its burning can't have changed much. The change is in the circulation of money between consumers, producers and tax-taking and spending governments.

The low oil price may be indicative of low demand associated with a depressed global economy rather than stimulating a boost to the economy.

In which direction does the arrow of causation point?

[vtsnowedin]

A cut in energy prices etc should give a generalised boost to the economy. It normally does.

Why?

I mean to say, the volume of oil produced has not changed much so the activity associated with its burning can't have changed much. The change is in the circulation of money between consumers, producers and tax-taking and spending governments.

The low oil price may be indicative of low demand associated with a depressed global economy rather than stimulating a boost to the economy.

In which direction does the arrow of causation point?

It is an obvious positive to the economy. Not that any more or less is produced but due to the consumer having money left over after he pays his energy bills to do other things. $145 oil dried up all the extra cash in the economy causing people to stop doing discretionary spending such as eating out at restaurants. That triggered the great recession. The opposite price change will have the opposite effect.

[emordnilap]

Not so simple. The drop in pump prices in our small corner has been cancelled out by hefty vehicle insurance premia rises. That's following on from last year where we saw a minimum insurance price policy implemented by all companies, otherwise known as organised extortion.

It's probably better to not drive at all.

[clv101]

Insurance in the UK is also fairly expensive, not as bad as IE though. However, cars are far better (and more efficient) now than a couple decades ago, fuel is cheaper in real terms (it should be ~£1.60 a litre based on inflation from 2000) and the cost of public transport has rocketed.

'Motoring' has been cheaper, either relatively or absolutely.

[biffvernon]

A cut in energy prices etc should give a generalised boost to the economy. It normally does.

Why?

I mean to say, the volume of oil produced has not changed much so the activity associated with its burning can't have changed much. The change is in the circulation of money between consumers, producers and tax-taking and spending governments.

The low oil price may be indicative of low demand associated with a depressed global economy rather than stimulating a boost to the economy.

In which direction does the arrow of causation point?

It is an obvious positive to the economy. Not that any more or less is produced but due to the consumer having money left over after he pays his energy bills to do other things. $145 oil dried up all the extra cash in the economy causing people to stop doing discretionary spending such as eating out at restaurants. That triggered the great recession. The opposite price change will have the opposite effect.

It's not obvious to me. You may have more money left as you drive out of the petrol station on your way to the restaurant but the oil company and the government will have less money to spend on share dividends and library books, or whatever. A change in oil prices alters the velocity and pathways of money circulation but that does not automatically translate into either growth or recession in the economy.

Macroeconomics is far different to household economics.

[emordnilap]

Insurance in the UK is also fairly expensive, not as bad as IE though.

Interesting. When I first came here last century, I could afford fully comprehensive insurance, whereas I could never afford it in the UK. Indeed, TP/F/T is dearer than FC in Ireland!

1.2 diesel Polo, no claims, €270 (~£195) fully comp. Is that dear?

[johnhemming2]

A change in oil prices alters the velocity and pathways of money circulation but that does not automatically translate into either growth or recession in the economy.

Macroeconomics is far different to household economics.

Spikes in energy prices do cause recessions more generally and when we have low oil prices we see things such as "the goldilocks economy".