Price of Oil

amandstu

Seems to be a big story now .I am reading that that market has turned down for the foreseeable future.

How long before we see the price of heating oil and petrol drop correspondingly?

What is a typical lead in period?(I know lots of the price makeup is actually down to government tax....)

BoJack Horseman

amandstu wrote: »

Seems to be a big story now .I am reading that that market has turned down for the foreseeable future.

How long before we see the price of heating oil and petrol drop correspondingly?

What is a typical lead in period?(I know lots of the price makeup is actually down to government tax....)

Prices have already dropped considerably.

Kerosene is about 20c per litre cheaper than last winter.
Petrol/Diesel, around 15c per litre.

Regarding heating, dropping prices are meeting higher demand, so the price won't shift further by much.

Vehicle fuel will probably fall further.

Cleveland Hot Pocket

BoJack Horseman wrote: »

Prices have already dropped considerably.

Kerosene is about 20c per litre cheaper than last winter.
Petrol/Diesel, around 15c per litre.

Regarding heating, dropping prices are meeting higher demand, so the price won't shift further by much.

Vehicle fuel will probably fall further.

Is that pump kero or delivered in bulk?
Around me there's two places I go which have remained stable between 99 cpl and 105 cpl for the past 12-18 months.

BoJack Horseman

Cleveland Hot Pocket wrote: »

Is that pump kero or delivered in bulk?
Around me there's two places I go which have remained stable between 99 cpl and 105 cpl for the past 12-18 months.

Deliveries (as most users would receive it).

For a typical 500ltr delivery last winter you were looking at 93c - 97c per litre.

At the moment, its 72c per litre.

Geuze

On Mon 24-Nov 2014 I was quoted 730 for 1000 L of kero delivered.

I was told it was 940 a year ago.

This week I heard of 355 paid for 500 L, so that is below 72c L.

nice_guy80

OPEC are trying to screw Russia for their inaction over Syria

so they are overproducing and driving down the cost of oil
it is also making shale oil and gas unprofitable for companies in the US and Canada

I didn't know until the other day that the US is now almost the largest producer of oil in the world.

BoJack Horseman

nice_guy80 wrote: »

I didn't know until the other day that the US is now almost the largest producer of oil in the world.

Indeed they are expected to be by the end on 2015.

Its not that the OPEC nations are overproducing.
Their production is relatively normal.

Its just they aren't selling nearly as much as they used to to the USA.

halkar

Euro is losing value against $. We are not seeing much difference

Voltex

OPEC are playing a very tactical game and allowing free market dynamics do their thing.
Basically OPEC produce 9 million of the Worlds 30 million barrels of oil daily. The US through shale now produce 1/3 of this. However they have higher average extraction costs than OPEC members like Saudi. The tactic is to allow oil drop in price to a point where shale extraction and exploration is loss making.
I personally wouldn't be surprised at seeing $40-$45 for WTI over the next 12 months.

BTW..I think this will be the end of OPEC being the price maker!

hfallada

Voltex wrote: »

OPEC are playing a very tactical game and allowing free market dynamics do their thing.
Basically OPEC produce 9 million of the Worlds 30 million barrels of oil daily. The US through shale now produce 1/3 of this. However they have higher average extraction costs than OPEC members like Saudi. The tactic is to allow oil drop in price to a point where shale extraction and exploration is loss making.
I personally wouldn't be surprised at seeing $40-$45 for WTI over the next 12 months.

BTW..I think this will be the end of OPEC being the price maker!

No OPEC have cut production at higher prices to force prices higher. Some people are thinking that the US and OPEC are trying to force oil prices down to destroy the Russian Economy and I almost believe them. Russia replies on oil and gas to basically support its economy. The Russian Rouble is falling suggesting a failing economy. OPEC and the US are trying to damage the Russian Economy.

In economies you learn that a producer is often better off cutting production, which raises prices, so they can produce less and make more profit. Oil not going to go near 40USD a barrel. OPEC countries like Saudi Arabia need high prices to fund their Government. They will cut production tomorrow to increase prices if they have to. Likewise the US producers wouldnt produce oil if it isnt profitable.

Voltex

hfallada wrote: »

No OPEC have cut production at higher prices to force prices higher. Some people are thinking that the US and OPEC are trying to force oil prices down to destroy the Russian Economy and I almost believe them. Russia replies on oil and gas to basically support its economy. The Russian Rouble is falling suggesting a failing economy. OPEC and the US are trying to damage the Russian Economy.

In economies you learn that a producer is often better off cutting production, which raises prices, so they can produce less and make more profit. Oil not going to go near 40USD a barrel. OPEC countries like Saudi Arabia need high prices to fund their Government. They will cut production tomorrow to increase prices if they have to. Likewise the US producers wouldnt produce oil if it isnt profitable.

In the short run that makes sense to reduce production...but here OPEC are playing the long run game. At the last OPEC meeting (2 weeks ago?) they committed to keep production at current levels.

The current Rouble issues are more to do with investors lacking confidence in the currency due to effect of sanctions not oil alone. On the oil price...AFAIK, Saudi break even is around $40 p/b...which they will sustain in the short run if need be!

antoobrien

amandstu wrote: »

How long before we see the price of heating oil and petrol drop correspondingly?

What is a typical lead in period?

The oil being sold right now is for delivery to refineries in January, so 6-10 week lead in time.

You also have to factor in the exchange rates when calculating the final price. This is trickier as it's unclear when refineries will switch from USD to EUR, is it at the time they the crude or when they sell on the refined product.

Given the fact that many petrol stations seemingly react to currency fluctuations, I'd wager it's the latter (at least in the case of the US owned companies).