Oil prices have increased 60% since late January. Is this an oil-price recovery?
Two previous price rallies ended badly because they had little basis in market-balance fundamentals. The current rally will probably fail for the same reason.
The Oil Glut Worsens But Prices Reach 2016 Highs
Although oil prices reached the highest levels so far in 2016 during the past few days, the global over-supply of oil worsened in March.
EIA data released this week shows that the net surplus (supply minus consumption) increased to 1.45 million barrels per day. Compared to February, the surplus increased 270,000 barrels per day. That’s a bad sign for the durable price recovery that some believe is already underway.
The production freeze that OPEC plus Russia will discuss this weekend has already arrived. Supply increased only 20,000 barrels per day in March. Consumption, however, decreased by 250,000 barrels per day. That’s not good news for the world economy although first quarter consumption is commonly lower than levels during the second half of the year.
The April IEA Oil Market Report was also released this week and it largely corroborates EIA data. First quarter 2016 liquids supply surplus was 1.53 million barrels per day compared to EIA’s 1.71 million barrels per day for the quarter.
The first quarter 2016 surplus fell 220,000 barrels per day from the fourth quarter 2015. Overall supply declined 660,000 barrels per day but demand fell by 880,000 barrels per day.
IEA’s demand growth forecast for 2016 remains 1.2 million barrels per day. 2015 demand growth was a very high 1.8 million barrels per day because of low oil prices. 1.2 million barrels per day is, however, consistent with average growth from 2011 through 2014.
Oil prices have increased from $26 to $45 per barrel during the current January – April price rally. This is based partly on hope for an OPEC-plus-Russia production freeze that almost everyone agrees will do nothing to balance global oil markets.
There were two major price cycles in 2015. During the first cycle, WTI prices increased from about $44 in mid-March to more than $60 by early May over a period of about 50 days. This was based on plunging U.S. rig counts and withdrawals from storage. Prices remained around $60 per barrel for 25 days and then fell to about $38 by mid- to late August over a period of 72 days. The total trough-to-trough period of the cycle was 157 days.
During the second cycle, prices increased from $38 to more than $49 per barrel in only 7 days in late August 2015 based on good economic news about China and U.S. storage withdrawals. Prices fluctuated between $39 and $49 with an average price of almost $45 per barrel for 93 days. After falling below $40 per barrel in early December, prices dropped to $26.55 on January 20, 2016, a period of 46 days.The total trough-to-trough period of the cycle was 146 days.
At the beginning of the present cycle, prices increased from $26.55 to $33.62 in late January and then dropped to $26.21 on February 11. This “double-bottom” pattern probably tested the low-price threshold for the greater oil-price collapse that began in June 2014.
That does not mean that a price recovery is in progress. It suggests that because $26 per barrel is so far below the marginal cost of production that prices are more likely to increase going forward than to discover a lower bottom.
Following the double-bottom, prices increased to $41.45 on March 22 over a period of 40 days. Prices fell to $35.70 over the next 12 days before increasing to $42.17 on April 13. Yesterday, prices fell to $41.52. The total duration of this cycle is 63 days so far.
Aside from the global production surplus, the huge amount of oil in storage is the other key factor working against a price recovery right now.
Last week, a larger-than-anticipated 4.94 million barrel withdrawal from U.S. storage re-ignited the price rally that had stalled during the previous week. A 6.6 million barrel addition this week was largely ignored by the market as futures prices fell only $0.44 yesterday.
U.S. stocks are near record high levels of 78 million barrels more than at this time in 2015 and 138 million barrels more than the 5-year average.
OECD stocks are also at record levels of 3.13 billion barrels of liquids. That is 359 million barrels more than the 5-year average but 54% of those volumes are U.S. stocks.
Comparative inventory patterns have been mixed and unclear for the past few weeks. Cushing stocks have been decreasing but Cushing-plus-Gulf Coast and overal U.S. crude oil inventories have been alternating between decrease and increase. It is, therefore, too early to tell whether comparative inventory data supports a price increase or not.
Posted in The Petroleum Truth Report on April 14, 2016
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Oil and gas sector is one of the most lucrative sectors for job seekers from industries all over the world. It offers great salaries and benefits packages and an opportunity to travel and work overseas. Due to its high demand, scammers are preying on the vulnerable oil and gas workers. To ensure you don’t fall prey to their mischievous tactics, we would recommend reading our guideline below:
How does scamming occur?
The scammer poses as an employer or recruiter of an oil and gas company or he may claim to be an employee or recruiter for a job consultancy firm catering to the oil and gas industry. They offer irresistible employment opportunities and often demand money in advance to conduct further processes. Money is often demanded on the pretext of work visas, travel expenses, background or credit checks that the job requires.
What do scammers want from you?
It is important to understand what the scammer's agenda is so that it helps you shield yourself from getting conned:
To extract money: On the pretext of getting you a job in the energy sector employing any of the tactics mentioned above
For identity theft: scammers look for valid identity of people and ask for confidential personal details including bank details to commit fraud through your name or to withdraw money from your account.
Whatever be their modus operandi, their goal is to either separate you from your cash or accomplish an identity theft. The bigger problem is, the scammers are getting better at their game and coming up with innovative ideas to lure innocent job seekers. In oil and gas industry, the scammers are targeting the job seekers from overseas, immigrants or contractors as they feel it is easier to attract them on the pretext of work permits, high salaries, paid travel, better lifestyle in the first world countries.
How to spot a job scam and keep yourself secure?
There is always a difference between real and fake, all you need to do is be watchful to notice the underlying discrepancies. There is a pattern that scammers usually follows, which is discussed below. Make sure you watch out for these red flags when you receive any job offer next time:
Free email provider - No legitimate hiring agency or company will use the services of free email provider like Gmail, Hotmail, or Yahoo. So, if you are receiving an email or have been requested to share your details on emails that use free email services, then be extremely cautious. The scammers try to trick the job seekers by using an email address that looks authentic for instance: [email protected]. It is important to notice here that the ‘xyz’ part of the email ID is usually a gmail, yahoo, etc. which is a free email address. A legitimate job provider would never use.
Fake or new company name - If company name or oil and gas recruitment agency name is mentioned along with the free email id, then do a quick search on the company. Verify its existence and contact them via official email address and contact numbers mentioned on the website. Check their social media presence too. If the website and social media page look new while the company claims to be in business for a substantial amount of time, know for sure that there is something fishy.
Bad grammar and confusing job details - The scammers usually do not pay much attention to structure the mail. You can spot grammatical errors and even the job descriptions are not explained well or is completely different than your skillset and experience. Any authentic mail from a company or oil and gas recruitment agency will ensure an error-free, concise, and clear communication
Fee to conduct a job interview - No legitimate oil and gas company or recruitment agency will ever ask for money to conduct a job interview or to apply to job positions. If the mail says, the money will be refunded once you appear for a job interview, then please do not trust such claims as it is always bogus.
Asking for confidential personal information - Anyone asking for information that you will never put on CV, is a warning sign. It includes your bank details, passport copy, identity cards, your current residential details and so on. No genuine company will ever ask for such details before you sign the offer letter. If by chance, you have shared your bank details or another confidential detail to the scammer, contact your bank and email service provider and register a complaint against it.
Unknown source - There are countries who have strict spam rules and until you subscribe or give consent to the company, they cannot send you emails. So, if you receive an email from a company you haven’t contacted or have not applied for jobs, then be cautious it might be a scam.
The principle on which scammers operate is “Too good to be true”. Don’t entertain any job offer that offers a position, you are not qualified for or offers a salary which is unrealistically high. In the oil and gas sector, be careful not to reveal your passport/work visa details to the scammer. Remember, if you find anything which is way beyond the realistic expectations, then trust your instincts and drop the offer and do not respond.
See our infographic below for a quick summarized glance -
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Searching for the right talent is often a tedious chore for the HR. However, with technological improvements, the usage of app-based recruitment has increased manifold. Recruiters and job seekers are increasingly adopting this new method. A mobile application simplifies the labor-intensive and time-consuming recruitment task and comes loaded with features that help to automate the recruitment cycle. For all the good, app-based approach can do, it still comes under fire from the critics. Here's our take on the pros & cons of App-based talent search.