Energy Landscape and Dynamics of Oil

  • Apr 29, 2019 AEST
  • Team Kalkine
Energy Landscape and Dynamics of Oil
The demand dominates energy sector while supply is still lagging behind it, which in turn, is prompting energy producing companies to take advantage of high commodity prices such as crude oil. The energy demand on a yearly basis and monthly basis is on a surge, while supply is still trying to cope-up with the high global energy demand. Energy demand and sector both plunged in the Mid-2018 amid the harm caused by the trade war between the two significant economies of the world to the global economy. However, in the recent event, the progressive trade talks are undoing the harm caused by it in the recent past, and the energy sector is again picking up the pace. As predicted by the graph above, the energy consumption in the global market is exceeding the production on yearly basis, while the import and export of the total energy in the United States are moving near balance. On a monthly basis: On a monthly basis, it can be seen that global energy consumption is again surpassing the production or the supply chain from early 2019. It can be seen from the graph above that the consumption slipped below the output in the mid-2018 amid the pressure exerted by the trade war on the global economic condition, which led to a slowdown in global economic conditions; thus, reducing the energy consumption. With improving signs in the global economy, the energy demand is again picking up the momentum, which in turn is taking the eyes of energy investors towards the crude oil, as the oil still makes up for a considerable amount of global energy demand. In the recent event, an outrageous shortage in the global supply chain of the crude oil, supported the crude oil prices and the prices are now trading around almost around $71 a barrel (Brent Oil). The factors which led to the shortage of oil in the global market include production cut by OPEC, Export loss from Venezuela and Iran, Civil Wars in Libya, etc. The OPEC members voluntarily reduced the production of crude oil to support the prices in the global market, which in turn, marked a considerable decline in the global oil supply chain. Apart from such a loss of production from the supply chain, the U.S exerted sanctions against top oil exporting countries such as Venezuela and Iran, which further dampened the supply chain and supported the crude oil prices. In the recent event, the U.S. removed waiver of on import of Iranian crude, which created a panic in the global market and boosted the crude prices above $72 a barrel. However, the crude oil prices fell drastically recently in the global market as the oil stockpiles in the United States grew significantly. As per the recent data, the U.S. crude Oil Inventory stood at 5.5 million barrels against the market expectation of 0.9 million barrels for the week ended 19th April 2019. The sudden rise in the United States stockpiles as compared to a net decline of 1.4 million barrels in the previous week, jolted the energy investors and exerted the pressure on oil prices. In the scenario of global supply shortage, all energy investors are eyeing on the United States oil inventories and possibility of U.S. emergence as a net exporter of the oil in the global market.


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