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An Intelligence Network For Supply Chain Energy Commodities Forecasting

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Sun, 04/17/2011 - 11:31 | 1177771 tawdzilla
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"In recent years, there has been a great deal of instability in the price of energy sources and basic feedstocks, including oil and natural gas. This volatility is the result of tight supply resulting from changes in global demand."

 If oil prices are purely a function of global demand, why did prices fall from $140/bbl in '08 to $40/bbl in '09, and back up to $120/bbl in '11?  To justify those prices, global demand would have had to fallen off by 75% from '08 to '09, then increased by 200% (tripled) from '09 to '11.  The chart below shows quite the contrary.  It proves that global demand for oil is not that volatile.  Global demand for oil decreased by 1% from '08 to '09, then increased by 4% from '09 to '11.  

 

  

Sun, 04/17/2011 - 08:57 | 1177602 sethstorm
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In contrast, demand and pricing of contingent labor services tend to stay relatively stable throughout the ups and downs in a particular economic cycle. As such, contingent labor is designated as a late-cycle category in the aforementioned example.

The more of it you see, the less chance of recovery.   Temporary work reflects a rightful lack of trust, since the employer wants a task done, but retain the ability to lord over the persons doing it.  Any flexibility is on the employer's side, where it does more damage.

 

 

 

 

 

 

Sat, 04/16/2011 - 23:19 | 1177177 mayhem_korner
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As long as the situation in the Middle East and North Africa remains volatile and unresolved, markets will keep adding a "fear premium" to crude oil and associated products, whereas natural gas is basically in the doldrums trapped within the U.S., with a rising glut of inventory. Additionally, most analysts predict U.S. natural gas prices will remain mostly flat for the next three to five years.

Two points here (disclosure: I am a CRO within the energy industries):

1) U.S. natural gas prices are 'in the doldrums' in large part because the marginal supply is the perceived-plentiful shale gas.  Because of the depression, demand has been reduced such that shale isn't even on the margin...so it appears like a glut.  Absent shale gas (future unknown), global LNG shipments would be on the margin for the U.S., and prices would move toward parity with other destinations that import all of their natural gas (esp. Japan and certain W. European countries, who peg gas to Brent).  If that comes to be - not likely soon - natural gas will begin to behave like oil.

2) The fact that natural gas prices have fallen in nominal terms while the dollar has lost 10%+ of its value is a very strong indictment on the weakness of domestic industrial demand.

 

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