Showing papers on "Brent Crude published in 2005"

Oil Prices and ECB Monetary Policy

Abstract: The ECB and the Eurosystem should take past, present, and predicted future oil-price movements into account in its monetary policy depending on how these movements affect the inflation and output-gap forecasts that should guide monetary policy. Oil price movements have complex effects on these forecasts, so the impact of oil price movements on policy is complex. Hence, an evaluation of whether the ECB has responded appropriately to past oil-price movements is a somewhat demanding exercise. Oil prices have moved dramatically in the last two years. The price of Brent crude oil

Henry Hub and national balancing point prices: what will be the international gas price reference?

Abstract: One of the lessons in the history of international trade in commodities is the emergence — sooner or later — of an international price reference, most commonly known as an international marker price. In the area of oil, West Texas Intermediate (WTI) plays the role of a marker for sour crudes traded in the Atlantic basin. Brent oil fulfils this function for sweet crudes traded in Europe. Another important aspect in the area of global commodities is that the emergence of a marker price is not always necessarily related to the relative share of production or exports of the commodity, but primarily to the existence of an organized market for this commodity. Today, while international gas trade is intensifying, we still lack an international price reference for this commodity. This is due to the fact that the international trade of natural gas is still highly regionalized. It is also due to the fact that most gas markets are still regulated. Nevertheless, deregulation efforts have been implemented in both developed (the United States, the United Kingdom, continental Europe, Korea) and developing countries (Brazil, Chile) and have led to new market structures based on more competition in all segments of the gas chain, except transportation. In the meantime, price structures based on supply and demand principles are supposed to have emerged in the US and UK markets in the 1990s as a result of the implementation of deregulation measures. Today, the US gas market, which represents more than 660 billion cubic metres per year of consumption and the UK gas market, which is close to 100 bcm annually, are considered mature enough to make the principles of supply and demand operate inside these markets. In fact, the Henry Hub (HH) price, which is determined at a physical location in Louisiana, US, and the national balancing point (NBP) price, which is determined somewhere inside the national transmission system (NTS), without any precise location, are considered as potential candidates to serve as a marker price in the international trade of gas. The objective of this paper is to examine some fundamental properties of the HH and NBP prices and assess which of them has the biggest potential to become an international price reference. Our main conclusions are: 1According to the relatively huge volume of gas traded on the US spot market, compared with the UK, and according to the experience accumulated by the New York Mercantile Exchange (NYMEX) in gas trading, the HH price has a bigger potential than the NBP to become an international price reference, particularly because the UK market is supposed to import more and more gas indexed to oil in the coming years. 2However, on the price fluctuation side, the NBP spot price seems to fluctuate more normally than the HH price in the short term, which can give a certain advantage to NBP prices. 3We cannot exclude the fact that in the coming years we will have two or even more reference prices in the Atlantic Basin: the NBP, the HH and also reference prices at other regional hubs.

The Economics of Oil Definitions: The Case of Canada's Oil Sands

Abstract: Canada has chosen to define its 174 billion barrels of oil sand bitumen reserves as crude oil deposits, putting the country on a par with Saudi Arabia in potential oil production. However, the physical and economic definition of calling oil sand bitumen crude oil needs to be questioned. On the face of it, these definitions make Canada look as powerful as OPEC's leading producer, or Russia, on the world oil market. However, a fuller analysis shows that Canadian oil sand is quite different from crude oil and that Canada will have little if any effect on the global oil market, or on OPEC.

A Semiparametric Approach to Short-Term Oil Price Forecasting

Abstract: In this paper it is shown how the GARCH properties of the oil price changes can be employed to forecast the oil price distribution at short-term horizons. The forecasting approach is semiparametric and it is based on the bootstrapping approach. The results of an out of sample forecasting exercise, carried out using the Brent oil price series, suggest that the forecasting approach employed is of practical relevance and can be used to obtain a performance measure for the available forward price and produce interval forecasts for the oil price.

What Direction for Oil Prices

Abstract: The price of crude oil goes up and up -most recently driven by hurricane Katrina, which had a catastrophic effect on the US oil industry, and was followed by hurricane Rita. In September 2005 the price of Brent crude reached a new record at US $ 66 per barrel. The agreement by member states of the International Energy Agency (IEA) to release crude oil and petroleum products from their strategic reserves has brought prices down again slightly, but it is very questionable whether this will calm the upward drive for long. Crude oil prices have been rising continuously since 2003, largely as a result of increased demand, particularly from China. The high level of capacity utilization in oil extraction creates risks that are reflected in rising prices on the forward markets. The rise in oil prices since 2003 is around US $ 30 per barrel, and this is probably mainly due to short-term effects and resultant speculative buying. In view of the high stocks of oil the current prices do seem excessive. Sooner or later they will normalize on a lower level, but in the long term higher prices for oil than the average of recent decades must be expected. Model simulations up to the year 2025 show that in a scenario of adequate resources real oil prices (price base 2000) of between US $ 30 and US $ 40 per barrel are to be expected. In a scenario of more limited resources, however, prices could rise to just under US $ 80 per barrel in real terms, which is up to US $ 160 nominally.

Oil and gas markets in the uk: evidence for from a cointegrating approach

Abstract: The paper examines the relationship between UK wholesale gas prices and the Brent oil price over the period 1996-2003 Tests for Unit Roots and Cointegration are carried out and it is discovered that a long run equilibrium relationship between UK gas and oil prices predates the opening of the UK-Mainland Europe Inter-connector Following a recursive methodology (Hansen & Johansen 1999), it was found that the cointegrating relationship is present throughout the sample period However, the long run solutions seem to be more volatile Evidence is provided that the short run relationship is linear and impulse response functions are used to examine the effects that a shock in oil would have on gas