Understanding Oil Prices - A Guide to What Drives the Price of Oil in Today's Markets

Informationen zum Autor About the author SALVATORE CAROLLO graduated in engineering from the University of Palermo, where he also served as a lecturer and researcher. In 1975 he began working at eni; both in Italy and abroad where he was active in various sectors of the petroleum downstream, refining, market research, supply and trading of crude oil. Since 1995 he has been based first in Amsterdam and then in London as the manager of the Upstream Marketing Department, where he is responsible for the commercial relations with several producing countries and eni partners in various joint ventures. Within this area he provides support to eni corporate university, through teaching activities at the Mater MEDEA and organizing the annual Oil Market and Commercialization of Crude Oil seminar. He is often called in as an expert by various institutions in the oil sector to provide his own analysis on the dynamics of oil prices. Klappentext Oil prices have seen massive fluctuation over the past 10 years, with price per barrel growing from $9 to $140. More recently, we have seen fluctuation from $140 to $37/barrel, and back up to $120 - all in a matter of months. But why? It is still a popular belief that OPEC can affect the price of oil by regulating the volume of production and using this key raw material for their political aims, but the reality is quite different. In the last decade, despite a constant potential surplus of crude in the markets, we have seen the prices fluctuating dramatically with no apparent logic.Starting from the Chernobyl accident and the Clean Air Act implementation in the US, structural changes within the oil industry have modified the dynamics of oil prices. The existing technological refining system is no longer adequate to transform, with the necessary continuity, the crude oils into the high-quality finished products demanded by the market. Furthermore, from the beginning of the year 2000, the oil futures market detached itself almost completely from its original nature (the barrel of oil), becoming a purely financial market, but still able to heavily affect the real oil prices. More sophisticated models are needed to understand this new scenario.This book thoroughly demystifies the oil market, showing readers what really moves the price of oil today. It provides a comprehensive analysis of the industry fundamentals and the role of financial speculation, illustrating the complexity of the relationship of three different markets that regulate the oil sector: the crude oil market (raw material), the finished products market (gasoline, diesel, jet fuel, fuel oil, chemical feedstocks, lubricants), and the financial market (futures). It will provide an excellent grounding in the topic for anyone involved or interested in the oil markets, including financial analysts, traders, investors and energy market participants. Zusammenfassung Explains that the truth behind increasingly volatile oil market is that over the years oil prices have come untethered from all classical notions of supply and demand and have transcended any country's, consortium's, cartel's, or corporate entity's powers to control them. Inhaltsverzeichnis Foreword xiii Preface xv Quick Reference Guide xix List of Figures xxiii List of Tables xxvii List of Boxes xxix 1 TheWorld Crude Oil Paradoxes 1 2 The Market Events from 2008 to 2011 7 World Energy Policy 8 The Financial Crisis and the Oil Market 10 Fundamentals or Financial Speculation? 17 Demand/Supply of Gasoline and Gasoil 21 WTI - Brent Differential 24 3 Evolution of the Price of Crude Oil from the 1960s up to 1999 29 1960-1980: The Oil Monopoly and the Two Crises in the 1970s 30 The 1980s: The Gradual Disappearance of OPEC 33 The Price War 35 ...

List of contents

Foreword xiii
 
Preface xv
 
Quick Reference Guide xix
 
List of Figures xxiii
 
List of Tables xxvii
 
List of Boxes xxix
 
1 TheWorld Crude Oil Paradoxes 1
 
2 The Market Events from 2008 to 2011 7
 
World Energy Policy 8
 
The Financial Crisis and the Oil Market 10
 
Fundamentals or Financial Speculation? 17
 
Demand/Supply of Gasoline and Gasoil 21
 
WTI - Brent Differential 24
 
3 Evolution of the Price of Crude Oil from the 1960s up to 1999 29
 
1960-1980: The Oil Monopoly and the Two Crises in the 1970s 30
 
The 1980s: The Gradual Disappearance of OPEC 33
 
The Price War 35
 
1985-2000: From the Introduction of Brent as an International Benchmark to the Clean Air Act 37
 
The Suicide of OPEC 40
 
The Start of the Free Market 41
 
The Consequences of the Environmental Turnaround 44
 
4 Changes in the Market for Automotive Fuels 45
 
Evolution of Environmental Demand 45
 
Gasoline and its Components 50
 
Reforming 51
 
Cracking 52
 
Alkylation 53
 
Isomerization 53
 
Refiners Walk the Tightrope 53
 
The Fiscal Policy of the Industrialized Countries Regarding Fuels 55
 
5 World Oil Flow 63
 
Transformations in the Downstream 66
 
World Supply Structure 70
 
6 The Classical Model of the International Oil Market 73
 
7 The Short-term Model of the International Oil Market 81
 
8 The Brent Market 89
 
The Sale and Purchase Contract 90
 
The Forward Market for Brent (15 day Brent Contract) 94
 
The IPE Brent Market 100
 
The Divorce Between Oil Price and Oil 102
 
9 Principal Uses of the Forward and Futures Markets 105
 
Tax Spinning 105
 
Benchmarking 105
 
Hedging the Price Risks 106
 
Speculations on Operational Flexibilities at Loading 114
 
Market Structure: Contango and Backwardation 117
 
Procedures at the Loading Terminals 119
 
10 Problems of the Brent Forward Market 123
 
11 The European Refinery Crisis 131
 
12 Conclusions:We are Ourselves OPEC 155
 
Bibliography 163
 
Index 165

Product details

• Authors: Salvatore Carollo, Carollo Salvatore
• Publisher: Wiley, John and Sons Ltd
• Languages: English
• Product format: Hardback
• Released: 25.11.2011
• EAN: 9781119962724
• ISBN: 978-1-119-96272-4
• No. of pages: 220
• Series: The Wiley Finance Series
• Subjects: Education and learning > Teaching preparation > Vocational needs; Social sciences, law, business > Business > Business administration; Finanzmarkt, TECHNOLOGY & ENGINEERING / Petroleum, Investment and securities, Petroleum, oil and gas industries, Allg. Finanz- u. Anlagewesen, Finance & Investments, Finanz- u. Anlagewesen