Very usefull links





Business Partners




caracas chronicles

Gustavo Coronel


Venezuela Today

Le Blog des
Energies Nouvelles







Andrew MacKillop :Where is $130 Oil?

Way back in September 2011, Goldman Sachs let us all know its Nice Price for 2012: $130 per barrel for Brent and $126.50 for WTI, allowing us to cling to the famous Brent premium, but shrunk to the price of 2 cups of Starbucks cheapest takeout coffee, without the beigel !

Unfortunately for GS petro-dreamers, oil faces fundamentals that all point downward: maybe 2013 ?

Plenty of deep-sea monsters swim in the oil pool, but tweaking what they mean is difficult. The oil inventories monster, still growing and sinking under its own weight, can be looked at several ways and for petro-boomers the best way is looking at how fast oil traders react to really small stock moves: changes in US inventories representing 9 or 10 million barrels or 12 hours of US consumption, if they are upward, can trigger several days of downward price movement, or at best a flat-line.

Conversely, a mega-indicator like world rubber demand and prices moving down - meaning China is building, buying and exporting cars, scooters, bicycles at a markedly slower rate, in the same way European carmakers are taking massive double-digit percentage hits to their sales volumes - hardly adds any downward spin to oil market price trends. The shrinking value of the euro against the USD, which in real world terms bolsters the still high, still strong and always unrealistic Brent premium, is another unreal world factor making oil price forecasting a game for deep sea monsters.


Petro-boomers believe in risk premiums. The premium right now is high and could be anywhere up to $15 per barrel. Curiously, as the Libyan story of 2011 showed, their scare level or fright quotient tends to unravel and shrink well before the threat, which they exaggerated, finally quits the news scene. Surprise is the game for scare premiums on the oil price, and Iran is about the most unsurprising, longest-running scare story in world oil. Exporting anywhere from 2.2 to 2.6 million barrels a day of crude, depending how much you want to exaggerate Iran's role, but importing a lot of refined products (about 0.75 - 1 Mbd), Iran is a regional oil business player with surprising potential add-on price impacts to refined products markets across Eurasia.

Even more curious, Nigeria's civil strife and Al Qaeda-inspired conflicts, or at least riots triggered by doubling the price of gasoline, or trying to, quickly fall off the newswires and out of the risk premium for world oil, especially Brent. Like Iran, Nigeria also exports 2.2 to 2.6 million barrels a day, we can read and believe if we want. More believable, we find that exactly like Iran, Nigeria imports a lot of refined products, even depending on refined exports from up-river Niger - which imports its crude from down-river Nigeria. Meaning, in fact, that global refined products output and shipments are a track for finding the real fundamentals. In the current global macro context, refined products and refinery utilization data are handy indicators of real trends.

Syria is in Arab Revolt-2, the civil war version which took over from the 2011 Jasmine Uprising, but the internal politics, and regional geopolitics of Syria are so complicated that petro-boomers stay away from the subject: after all this only concerns about 0.15 Mbd of crude oil supply, if that, but exactly like Iran and Nigeria, Syria is a big importer of refined products. However, the regional impacts from final breakdown of the unlovable Syrian regime are potentially huge, sweeping the region and easily impacting Israel and Lebanon, making Syria the best hope for GS petro-boomers trying to get their numbers right in 2012.


Thank goodness for China and India - but already India is falling off the teleprompter of oil price boomers. Predictably opaque information about India's real oil demand, stocks, refining capacity and crude supplier sources does not help, but shrinking economic growth in India is more transparent and easier verified than the clouding Chinese economic outlook. To be sure, predicting a hard landing for China is one of those games where, if you say it long enough you could be right one day, inch'allah. Today, we are getting nearer that day, and one of the leading most-real indicators is China's oil imports, refinery output and stocks.

These look flat and could be flat, which if true is one of the biggest deep-sea monsters threatening the fragile life raft of the petro-boomers.

Like we know, the Asian loco is coal-fired, in fact if Asian industry was not so high on King Coal its oil demand would be out of sight - but this leaves one other player: natural gas. Current gas consumption in China and India, on a per capita average basis, is minuscule at about one-twentyfifth the average for the US, against a mere one-seventh for average per capita oil consumption, for China, and one-twelfth for India. And world gas resources are growing, including big new stranded gas finds, and big potentials for Asian shale and coalseam gas development.

World LNG capacity is something like world production capacity for solar cells and windmills - out of sight relative to market potentials at present LNG prices. Just like giveaway solar panel prices and high profile business failures in the wind and solar industry, LNG prices have to fall.

For Asia this will be an energy turning point, where gas takes over some of the strain from growing oil import dependence and its upward pressure on traded oil prices. When gas prices in Asia really start moving downward from highs well above $14.50 per million BTU, Asian oil demand growth is going to receive another wooden stake in its heart. Even if the 130-dollar monster barrel of Goldman Sachs isnt dead, it will be ever more groggy, at least this Quarter !

Follow us and post your comments: in Twitter Facebook


Andrew MacKillop is energy and natural resource sector professional with over 30 years experience in more than 12 countries, with a first degree in economics (master equivalent), University College London (UCL), London UK. Is a founder member of the International Association of Energy Economist. In 1981-1986, was in-house Expert-Policy and Programmes, Divison A-Policy and DG XVII Energy at the European Commission, Brusels. Mr MacKillop was recently a syndicated columnist at the I-Media, Dubai newspaper Alrroya Aleqtissadiya, covering Energy and Economic, Finance and Development issues. To contact Mr. MacKillop wriite to Petroleumworld not necessarily share these views.

Editor's Note:
All comments posted and published on Petroleumworld, do not reflect either for or against the opinion expressed in the comment as an endorsement of Petroleumworld. All comments expressed are private comments and do not necessary reflect the view of this website. All comments are posted and published without liability to Petroleumworld.

Use Notice:This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of environmental and humanitarian significance. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107. For more information go to:

All works published by Petroleumworld are in accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.Petroleumworld has no affiliation whatsoever with the originator of this article nor is Petroleumworld endorsed or sponsored by the originator.

Petroleumworld encourages persons to reproduce, reprint, or broadcast Petroleumworld articles provided that any such reproduction identify the original source, or else and it is done within the fair use as provided for in section 107 of the US Copyright Law.

If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.
Internet web links to are appreciated

Petroleumworld News 02/07/2011

Follow us in Twitter
And post your comments in our
Facebook site

Petroleumworld welcomes your feedback
and comments, share your thoughts on this article,
your feedback is important to us!

We invite all our readers to share with us their views and
comments about this article, write to

Copyright© 1999-2010 Petroleumworld or respective author or news agency. All rights reserved.

We welcome the use of Petroleumworld™ stories by anyone provided it mentions as the source. Other stories you have to get authorization by its authors

Send this story to a friend Any question or suggestions,
please write to:
Best Viewed with IE 5.01+Windows NT 4.0, '95, '98, ME,
XP, Vista, W7 +/ 800x
600 pixels



Editor:Elio Ohep F./
Contact Email:

Contact: phone: Office (58 212) 635 7252,
or Cel (58 412) 996 3730 or
(58  412) 952 5301

CopyRight © 1999-2010, Elio Ohep F. - All Rights Reserved. Legal Information

- CCS Office Tele
phone/Teléfonos Oficina: (58 212) 635 7252

PW in Top 100 Energy Sites

Technorati Profile

Fair use notice of copyrighted material:

Legal Information

This site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission fromPetroleumworld or the copyright owner of the material.