If there is one thing oil producers and consumers can agree on it is that stable prices are best: best for planning and investment and best for the long-term health of the world economy. The trouble is, stability is just what the oil market has not had this year.
Over the last six months, oil prices have risen by almost a third towards three-and-a-half-year highs, only to give up almost all those gains in some of the biggest falls for decades. Worries that oil supplies could be cut off by war in the Middle East Gulf have been replaced by fear of global recession as the euro zone crisis has forced Greece to the brink of default.
Reuters Global Energy and Environment Summit 2012 heard dozens of decision-makers in the energy and climate businesses in London, Singapore, Dubai and Houston discuss how to make sense, and money, from the world’s biggest commodity market during a period of extreme volatility. For a summary recap report of the Summit, click here. Please share widely with clients and contacts as the document showcases how Reuters News stays ahead of our competitors with exclusive news and insights.
The co-heads of Swiss-based trading company Mercuria, Marco Dunand and Daniel Jaeggi, argued oil prices had found a long-term floor at $90-95 per barrel and nearby spot oil prices but they could rise sharply if Middle East tensions increase again. Such a rise would be a serious worry for Fatih Birol, chief economist of the Paris-based International Energy Agency, who told the summit oil prices remained a serious risk to the fragile global economic recovery even after recent sharp falls. Investors, meanwhile, are unhappy either way: worried by the impact of high energy costs on global growth but equally upset by big falls in outright prices, which deter fund managers from going long in oil. “Energy-related funds have really taken a beating, generally under-performing the average fund in their classifications,” said Tom Roseen, head of research services at Lipper in the United States.
Even as large investors stay wary of the energy sector, some of the biggest independent trading houses, including Vitol, Mercuria and Gunvor are expanding out of their traditional bases into new markets. Swiss-based Trafigura says it is ready for more investment in Asia and to hire more people as it expands operations to tap the region’s growing energy and commodities demand.
But rising energy demand could be a disaster for the world’s climate, earth scientists say. United Nations’ climate chief Christiana Figueres told the Summit many of the world’s leading economies risk missing targets for lower greenhouse gas emissions.
Some top stories from the Reuters Global Energy and Environment Summit include: (more…)