Petrol Prices - again...

[hawk20]

I note how our statisican is avoiding answering the very simple question but instead makes silly noises about conspiracy type theories.

If that is meant to be me, I'm not a statistician but an economist -but inevitably with a working knowledge of statistics.

I think I've answered your question several times. The price of oil is determined by supply and demand and it has fallen dramatically from the peak of over $130 per barrel due to the collapse of demand in the recession.

But let others try where I have failed. This article may help: -
Oil falls below $66 after bleak U.S. jobs data | Markets | Hot Stocks | Reuters

Those who think OPEC controls oil prices (rather than just having a significant influence) should note that they are well under half of world oil production and rarely manage to get their members to deliver any agreed cuts in full. Here's just one quote: -

"OPEC's higher level of discipline earlier this year surprised analysts. Earlier this year, it rose to a peak of around 80 percent of promised curbs, but as oil markets have recovered the group's compliance has faltered.
Reuters latest survey pegged discipline at 72 percent, still far above the historical average of 60 percent."

 

[hawk20]

Glojo, perhaps this will help: -
This link may help to explain tankers holding oil: -
http://www.businessinsider.com/oil-stored-on-tankers-is-up-71-since-april-2009-6

(and see Flanaia’s earlier postings).

Note the section which says: -
“Crude oil in floating storage fell in late May to around 90 million barrels from around 100 million barrels as prompt crude prices rose and narrowed the discount to prices further out. That discount was key to traders storing oil at sea to make profits by selling it later.”

So what investors do is buy oil now –if it is cheap due to a recession- so they can sell it some months later at a higher price as sentiment about the recession improves. And if there is a big gap between prices today and prices in 3 months time, then it may well pay to store some oil for delivery in 3 months.

There is always some oil in stock. Sometimes stocks rise (some held by governments, some by companies) and sometimes they fall. But if stocks stay roughly constant they don’t affect prices. If stocks are run down, they reduce prices for a while until stocks stop falling. And if stocks rise they increase prices for a while –due to buying of oil for stocks increasing total demand. But only for a while. Till stocks level off again.

Investment demand of all kinds (whether in stocks on tankers or elsewhere) or by buying and selling oil futures, is part of the overall supply and demand position. But really underneath it all, the oil is produced to be used. And in the long and medium term it is demand for oil for use, compared with supply from production, that really determines oil prices. Speculators, stock holders, and so on can affect short term movements but have no lasting long term effects.

Why? Because nobody wants a tanker of oil long term. In the end they will sell it.

It may also help to remember that world demand is about 85 million barrels per day and so the 90 million barrels in tankers is no more than one day's supply of oil. Peanuts.

 

[Dryce]

It may also help to remember that world demand is about 85 million barrels per day and so the 90 million barrels in tankers is no more than one day's supply of oil. Peanuts.

Yes.

But generally with volatile commodities (or equities) it just takes a tiny % of the quantity in circulation to be traded or held back to affect the spot price.



Add a few speculators in top and some flawed information and the market can get screwy pretty quickly.

Anyway I don't care right now -- last litre of RON97 fuel I paid for cost something like 30p

 

[glojo]

Yes.

But generally with volatile commodities (or equities) it just takes a tiny % of the quantity in circulation to be traded or held back to affect the spot price.



Add a few speculators in top and some flawed information and the market can get screwy pretty quickly.

Anyway I don't care right now -- last litre of RON97 fuel I paid for cost something like 30p

I am still waiting for our Hawk to explain why there were so many super tankers anchored in Lyme Bay just before the oilprices soared and don't forget thesevessels did not just materailise. Their cargo was purchased way before the rise in price, but they stayed anchored whilst the pricessoaredand then whilst they dropped.

I keep saying I am not asking questions about the price of eggs, strawberries or oil. I am asking this economist why anyone would watch their fifteen million tonnes of oil soar in value and not sell it? I thought my question was straight forward but all I keep getting is mumbo jumbo telling me something I am aware of

I do not understand the economicsbehind what my eyes have witnessed and I wass hoping we couldhave someone explain it.

In todays shipping climate I understand that so called storage tankers are at a premium and I am guessing my $75k per day charter fee is an extremely conservative, fair figure. To me it makes no sense and I was hoping someone could say...

Here you go John,
Here's the explanation..........

I would then go, "Doh!"

Instead I am finding out that there were more vessels anchored elsewhere doing exactly the same thing??

The last link supplied by Hawk is of no relevance and is just confrming what I am saying... oil is being stored.... It does NOT address the main issue of these tankers being here for OVER TWELVE MONTHS!!!!

 

[flango]

The practice of storing crude in supertankers is actually increasing again with a lot of tenders out to ship owners see HERE for a big example.

You also have to remember the contents of these tankers is not only crude, it could be specialist vegetable oils (Castrol Magnatec is Veg Oil based) or any other oil derivative that sells for a higher price during times of demand. Often they are loaded with expensive chemical feedstocks and the value of their cargoes can vary by Millions of dollars per day, thus timing of the sale is crucial so in the scheme of things £75k a day for vessel charter is not really significant.

If only people really knew what was in those tankers half of the time there would be a National outcry, perfectly legal though.

 

[glojo]

The practice of storing crude in supertankers is actually increasing again with a lot of tenders out to ship owners see HERE for a big example.

You also have to remember the contents of these tankers is not only crude, it could be specialist vegetable oils (Castrol Magnatec is Veg Oil based) or any other oil derivative that sells for a higher price during times of demand. Often they are loaded with expensive chemical feedstocks and the value of their cargoes can vary by Millions of dollars per day, thus timing of the sale is crucial so in the scheme of things £75k a day for vessel charter is not really significant.

If only people really knew what was in those tankers half of the time there would be a National outcry, perfectly legal though.

You are perfectly right to say we have no idea what is in those tankers and I do try not to specify. The annoying thing is that the trees block my view and i cannot see the anchorage fromour garden otherwise I would get the names and addresses of those vessels

What amazes me is that our media have not picked up on the 'What if' issues that are clearly a huge risk.

Lyme Bay\Tor Bay is the first safe haven for ships travelling up from the Bay of Biscay. it is a really nice, sheltered anchorage in all windsEXCEPT easterlies. Thankfully we usually only get theseduring the summer season and they are not usually severe.

BUT

what if

What if we did have a storm, or hurricane force easterly wind and anchors either dragged or chains broke?

I am not sure if there is a heavy duty ocean going tug based at Portland, but usually the nearest would be Plymouth! An easterly wind in these two bays is a shore wind and these tankers would be blown onto the rocks before we could say, "May Day"

I will not specualte what their cargo is but it will be whatever large super tankers carry

During the last oil crisis of the 1980's most of the tankers were Iranian but this time they are from just about any nation we care to mention and in fairness to torbay, it is a very nice little earner as we always see the Brixham pilot boat regularly taking out provisions, storesand relief crews. I cannot even begin to imagine how boring it must be to be anchored in a bay for extended periods... It must compare to being stuck in an office all day (I would HATE to work in an office)

 

[hawk20]

I am still waiting for our Hawk to explain why there were so many super tankers anchored in Lyme Bay just before the oilprices soared and don't forget these vessels did not just materailise. Their cargo was purchased way before the rise in price, but they stayed anchored whilst the pricessoaredand then whilst they dropped.

.

Well I've done my best. All the oil in all the tankers all around the world is a mere one days supply of oil Looks a lot from your window but in the broad scheme of things it is a tiny amount.

First we don't know what is in the particular tankers you can see so we can only guess. But if it is oil, maybe the owners stored it in the hope prices would rise further. Maybe they held till oil went to over $130 dollars a barrel. Maybe at that point they believed experts like the chief exec of BP who predicted oil would go on up to $200 per barrel. But it didn't. Suddenly the crash came and their stock of oil fell in price. Maybe then they decided to keep hold of it and wait for the next boom in oil prices.

Like home owners. Friend of mine wanted to sell at the peak and use the money to live on in retirement. He thought the boom would go on for a while longer. He was wrong. House prices have fallen and so now he has decided to keep his house, keep working a while longer and hope for another house price bubble.

Some buy. Some sell. Some hold. Very hard to predict what any given speculator will do on any given day.

 

[hawk20]

Well I hope I've answered your question glojo. I've certainly tried.

 

[glojo]

Well I hope I've answered your question glojo. I've certainly tried.

I guess you had best stick to pcp's,

but thanks for trying

 

[hawk20]

I guess you had best stick to pcp's,

but thanks for trying

No trouble. Rational explanations never please everyone.

 

[glojo]

No trouble. Rational explanations never please everyone.

That is all I want....

 

[hawk20]

That is all I want....

Read again slowly. It is what you have had.

 

[glojo]

Read again slowly. It is what you have had.

Enough ..You have given me your theories, but I have not found one sentence that answers my questions. I have read your theories, and thank you for posting them.

You have absolutely no idea how many large super tankers were\are moored off the coast of the UK for extended periods in excess of four months??? So how can you claim they are not controlling the price of fuel?

I do not believe you when you claim that all those vessels could not effect the price of fuel if they were all to dock imediately... I simply do not believe it, especially as you have NO IDEA of how many ships are anchored for these extended period. Why are all these vessels anchored off our coastline at a cost in excess of $75,000 per day, per vessel for extended periods in excess of 12 months? What post gives me a factual answer and not you just speculating

Read again slowly. It is what you have had.

I could have lots of theories, but folks whose opinions I hold in very high regard have quite correctly pointed out that speculators do not usually get involved with this type of wheeler dealing and I would guess that some of those vessels are loosing millions of dollars by anchoring here. (they might have bought their oil at the height of the boom). To me it just makes no financial sense. I am not talking about the current short term storing of oil, as it would appear that they are doing this in the hope the price will go up, but I am NOT talking about that. I am talking abot the longer term where the vessels have been here for months, so please, please, please do not keep posting the links that I have either already posted or have read

Four years ago the UK was using 377,000 barrels of oil per day, I would guess those anchored tankers could very easily flood.... the market with their product and contrary to what you are theorising, I would suggest that short term, those tankers might have an effect on the price of strawberries. Yes these vessels might be carrying any form of liquid you care to nominate, but I would suggest it will be oil.

Please feel free to point out the post that gives me a factual answer because that is what I want

 

[hawk20]

Please feel free to point out the post that gives me a factual answer because that is what I want

I would say that 62 and 67 come pretty close.

You look from your cliffs and see lots of tankers and you naturally suspect some sort of plot to starve the UK of oil (or so your postings say. They are you think holding baclk oil to drive up UK prices).

But although it looks a lot of oil, we know that all the oil, in all the tankers, stored all around the world, only amounts to one days supply of oil. It is a tiny part of the market.

Why do they hold it? To make money. They try to guess when they will get the best price as I described. Like some home owners do. Some get it right. Some get it wrong.

We also know that anyone in the UK who wants oil can get it at the moment. There is an abundance of supply. Tesco, Sainsbury, Shell ,BP and so on do not need to buy from the tanker owners in Torbay as there is lots of other oil available on world markets.

 

[stevesey]

You have absolutely no idea how many large super tankers were\are moored off the coast of the UK for extended periods in excess of four months??? So how can you claim they are not controlling the price of fuel?

But although it looks a lot of oil, we know that all the oil, in all the tankers, stored all around the world, only amounts to one days supply of oil. It is a tiny part of the market.

I have to agree with Hawk there (not often I do, but it's usually over a minoir detail) - there are plenty of sources to say the amount of oil on tankers (including those in transit) is less than one days supply. So it's very hard to see they can be used to, significantly, control the price of fuel.

 

[stevesey]

... I simply do not believe it...

:d:d

 

[oldcro]

:ro



Four years ago the UK was using 377,000 barrels of oil per day, I would guess those anchored tankers could very easily flood.... the market with their product and contrary to what you are theorising, I would suggest that short term, those tankers might have an effect on the price of strawberries. Yes these vessels might be carrying any form of liquid you care to nominate, but I would suggest it will be oil.

Please feel free to point out the post that gives me a factual answer because that is what I want

In 2007 the UK's total oil consumption was 1,763,000 bbl/day. Not sure where you got you figure of 377,000 bbl/day figure John, but it is way below the actual consumption rate.

 

[glojo]

In 2007 the UK's total oil consumption was 1,763,000 bbl/day. Not sure where you got you figure of 377,000 bbl/day figure John, but it is way below the actual consumption rate.

Heck

I am not with it

I did post you a reply and it got deleted

The figures I gave were four years old as per my post

UK: Production, consumption, imports and exports Denmark, in many ways is a small-scale version of the UK oil story. With a smaller population (5.4 million) and lower oil production than the UK (377,000 bpd average during 2005) Denmark is a significant second tier producer that has exported oil since 1997. However, Danish Oil production looks like it may be peaking. A Hubbert Linearization (HL) performed by Khebab (note that this link goes to Khebab's edit grid spread sheet), points to ultimate recoverable reserves (URR) in Denmark of 3.05 billion barrels of which 1.74 billion have already been produced. Produced oil represents 57% of estimated total recoverable oil and a decline in Danish production may be anticipated in the near future. In 2004, Denmark had produced 50% of the indicated URR

I am not interested in what speculators may or may not do and Hawk is very good at avoiding answering my questios and just going off on a long ramble

Torbay is just a small segment of the United Kingdom

I have NO IDEAhow many tankers are anchored long term

Please note the words long term

It is impossible for me to get Hawk to understand that all I want to know is WHY....WHY are we seeing tankers anchor long term. they are achoring long term and were here when prices were settled... The prixces soared and here in Torbay we had at least 12 super tankers, so we have in excess of 15,000,000 tonnes of cargo be that crude or fuel. How many other achorages are there around the UK that have equal or even more tankers that were doing the same thing?

I am NOT talking about one or maybe two vessels that are only anchored for a week or so I am talking about 12 months or perhaps very slightly less


I keep giving these numbers but all I get is waffle about small time speculators

I want to know why folks would do this

What was the price of oil 12 months ago and why on earth didn't all these tankers sell, sell, selll. If 12 are here in Torbay, can we say 12 at Lowestoft and 12 at Scapa Flow? That would be 36. I know Hawk will waffle about odd speculators and again that is not my point. I want to know why... Why are they doing it... What are the benefits.. $75,000 per day charter fees per vessel just being wasted for m12 months.

 

[stevesey]

John - The bracketted figures are the Danish ones (e.g. population 5.4million), that 377,00 figure is Danish production not UK consumption.

 

[glojo]

I will pm you the link that has the UK graph of imports exports and production... Don't feed Hawk