Oil (3): EIA Article Flashcards
What is the biggest factor affecting petrol demand?
Economic growth. Oil is what transports goods from consumers to producers and what powers heat, cooking, and electricity. People buy into these things when they make more money, increasing producers’ demand for oil.
How does OPEC influence oil prices?
Setting production targets and quotas.
How much of the world oil reserves and production does OPEC control?
72% of crude oil reserves, 37% of production
What is the OPEC’s success dependent on?
- Member countries willing to comply
- Consumer demand in response to high prices
- Competitiveness of non-OPEC competitors
- Efficiency of OPEC vs. non-OPEC producers
What are some causes of disruptions to the oil market?
- Geopolitical events
- Supply/demand
- Environment (pipelines, refinery outages)
What are some examples of geopolitical events that have caused disruption in the oil industry?
Arab Oil Embargo, Iranian Revolution, Iran-Iraq War, Persian Gulf War.
In general, what is the buyer/seller model like in the oil industry?
Highest bidder wins the available supply chain.
In tight markets, demand is high and supply is low.
In loose markets, demand is low and supply is high.
What are the three types of oil market transactions?
- Contract arrangements
- Futures contracts
- Spot transactions
What is guaranteed with a futures contract for crude oil?
Producers are guaranteed a price received. Consumers are guaranteed their price paid.
What are spot purchases?
On the spot purchases of a single shipment for prompt delivery at current market price.
What do spot market prices say about the market? Futures markets?
Spot markets signal about balance of supply/demand. Futures have info about physical supply/demand.
What projects are EIA engaging in?
Short-Term Energy Outlook. Annual Energy Outlook.
