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August 21, 2013

Egyptian Turmoil Unlikely to Impact Gas Prices

 

In something of a counter intuitive move, it appears as though recent developments in Egypt are unlikely to directly impact prices at the pump in the United States. According to CBS News’ Washington affiliate:

Jeff Colgan is an assistant professor at the School of International Service at American University. He watches the oil markets globally and that means keeping close tabs on the Middle East since so much oil is either produced or flows through that region. He says Egypt does not produce much oil so the turmoil there will likely have little impact on gas prices.

Colgan tells us, “What’s happening in Egypt is bad for a lot of reasons but the price of gas is probably not going to be one of them.”

But there is the Suez Canal which is a vital and heavily used passageway to transport oil and other goods around the world.

If something forced the closure or delayed ships traveling the canal – it raises the possibility of gas prices increasing. Still, Colgan says the canal is too important to the economy of Egypt and beyond to let anything that drastic happen.

“Typically the government wants to keep the canal open but one could imagine rebels who are trying to force the hands of the government could try but that is one scenario but militarily not likely,” he said.

Meanwhile, oil prices have slumped along with the market as a whole over the course of the last week. It remains to be seen whether the Suez Canal comes into play as the conflict between the Egyptian military and the Muslim Brotherhood intensifies.

Filed under:Causes and Solutions,Price Shocks | by Eyes on Energy @ 3:11 pm | 

August 7, 2013

Uncertainty in Data Clouds Oil Market

 

Short term oil pricing is uncertain leading into mid-August. The Washington Post reports that market trading volume has decreased in anticipation of new reports from a number of sources.

“The U.S. Energy Department, the International Energy Agency and the Organization of the Petroleum Exporting Countries all this week release their latest assessment of the energy markets, which includes a forecast for worldwide demand for oil. Analysts are anticipating some downward revisions, given a slowdown in China’s economy.

‘The slowed Chinese growth will be demanding of additional downward adjustments in global demand estimates by the various agencies,’ wrote Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, in a note to clients.

The market did have a swing of about $2 during Monday’s trading. A week ago, oil jumped nearly $5 on Wednesday and Thursday as the global economic picture seemed to brighten, even as central bankers in the U.S. and Europe indicated they’d maintain programs that helped to keep interest rates low. Then Friday, disappointing figures on hiring in the U.S. pushed oil down by 95 cents, though it still ended the week with a gain of more than $2 a barrel.”

We at Pumps are monitoring this incoming data closely and will follow the market moves as more information as it becomes available. Contact us to sign up for our monthly report with a review of the most influential stories so far in August.

Filed under:Fuel Price Trends | by Eyes on Energy @ 3:57 pm | 

August 07, 2013

 

Macroeconomic Factors

  • All of the other U.S. macro data has shown improvement — ISM manufacturing and services, regional Fed reports, the trade balance, and the weekly initial claims series.
  •  There are also positive reports – for a change – from Europe, where the recession seems to be ending. Japan is improving.
  • The China story is not one of recession, but it does matter how much Chinese growth slows.

Potential Risks

Short term oil pricing is uncertain leading into mid-August. The Washington Post reports that market trading volume has decreased in anticipation of new reports from a number of sources:

“The U.S. Energy Department, the International Energy Agency and the Organization of the Petroleum Exporting Countries all this week release their latest assessment of the energy markets, which includes a forecast for worldwide demand for oil. Analysts are anticipating some downward revisions, given a slowdown in China’s economy.

‘The slowed Chinese growth will be demanding of additional downward adjustments in global demand estimates by the various agencies,’ wrote Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, in a note to clients. The market did have a swing of about $2 during Monday’s trading. A week ago, oil jumped nearly $5 on Wednesday and Thursday as the global economic picture seemed to brighten, even as central bankers in the U.S. and Europe indicated they’d maintain programs that helped to keep interest rates low. Then Friday, disappointing figures on hiring in the U.S. pushed oil down by 95 cents, though it still ended the week with a gain of more than $2 a barrel.”

Pricing

The newest forward price curve shows that overall prices in August are projected to be at their highest since April, when a number of refinery setbacks began to push prices higher – earlier than is usually expected. The normal seasonal pattern is in evidence. What could change things? Hurricane season. We all hope that everyone stays safe and well, but hurricane risk is a part of the energy business.

To download a more detailed version of this report CLICK HERE.

Filed under:Eyes on Energy | by Fuel Expert @ 2:48 pm |