https://padlet.com/daynachiong1/eze47hl7nxwr Ian, Dayna, Lycia, PengKee,Zoe en-us 2016-11-11 08:39:36 UTC 2026-03-18 04:33:51 UTC hello@padlet.com daynachiong1 https://padlet.com/daynachiong1/eze47hl7nxwr/wish/139001237 The oil Industry has been down since the end of 2014. Earnings have been down and hence companies are retrenching people due to lack of revenue.The oil prices are fluctuating but it is still down and unprofitable.
The sole reason for price fluctuation is due to supply and demand. As US domestic production has doubled and producers like Saudi Arabia and Russia have also been pumping at high levels. Hence due to the fact that there is an increase in production, producers are forced to drop prices. The demand for oil also hasnt been good due to the fact that our economy is stagnant and there is a crisis.
Oil producing countries are suffering from economic and political trurbulence.
Topic covered: Demand and Supply]]> 2016-11-21 06:19:58 UTC https://padlet.com/daynachiong1/eze47hl7nxwr/wish/139001237 zoeee1999 https://padlet.com/daynachiong1/eze47hl7nxwr/wish/139172624 - cutting down on productions of oil to increase the prices of oil as prices has been wavering
- they are also cutting down as the industry has been oversupplying for the past two years and hopefully this would help create a balance between the supply and demand
- worries that as prices increase, those countries not in OPEC would start to produce more to earn more
- there are worries that those under OPEC would not follow the quota
- It is also expected that demand would increase by 1.2 million barrels a day in 2017
- even though there are plans for cuts, it may still end up to have increase in oil supply in 2017 just like 2016
Topics covered: Demand and Supply
http://www.cnbc.com/2016/11/30/the-opec-deal-is-done-heres-what-to-expect-from-oil-markets-next.html
- The price of oil has been constantly falling in the market
- Oil is an exhaustible resource so the prices should be rising over time. Its demand and supply curve is steep thus oil is generally inelastic.
- However due to the fact of increased production by the countries, there is a drop in prices.
- This would thus result in the short-term supply elasticity to be higher than what it is actually supposed to be.
- The variable that caused this is high production of oil.
- The first effect is that the supply of oil would be a lot more responsive to a change in prices.
- The second effect is the change in direction of trade. Instead of US being the most important importer of oil, China and India would take over. This is because demand for oil would go up and the two main countries that cause it to increase would be China and India.
- Prices would be affected which means that it would be harder for OPEC to keep the prices stable.
- The last effect is it affecting climate change. Due to the fact that our consumption is lesser than the oil supplied, there would be more to burn rather than hoping to limit the use of oil.
Topics covered: Demand and Supply, Elasticity [CHOSEN]
https://www.ft.com/content/368e73a6-9775-11e5-95c7-d47aa298f769

]]> 2016-11-21 18:01:07 UTC https://padlet.com/daynachiong1/eze47hl7nxwr/wish/139172624 https://padlet.com/daynachiong1/eze47hl7nxwr/wish/139521326 The demand for oil was so rapid that it grew faster than the rate oligopoly of oil can produce. Thus, when there's demand is greater than supply, it actually drives the price of oil per barrel to rise to reach market equilibrium. Since the retail price of oil per barrel is on the rise, this profitable opportunity attracted many new companies entering the oil industry. When prices are fixed at above inflation rate for a long time, it eventually discourage consumers. Hence, since there was a lot of producers before, with lesser demand, there would be a surplus amount of oil. Thus to tackle such issues, many companies decided that by lowering the price of oil, it would aid them. However, with stiff competition, cut-throat strategy occurs and certain inefficient companies that may not even break-even may close down or go bankrupt. The low price narrative that is continually being repeated is to  cover up for poor capital allocation decisions, the inability to control costs and the reluctance to adopt technology.
Topic covered: Oligopoly ]]> 2016-11-23 07:56:59 UTC https://padlet.com/daynachiong1/eze47hl7nxwr/wish/139521326 chewian99 https://padlet.com/daynachiong1/eze47hl7nxwr/wish/144864804 1) Oil prices rise up nearly 6% after the Organisation of the Petroleum Exporting Countries (OPEC) made a deal to limit the crude output.  OPEC reached an agreement to limit the oil production to a range of 32.5m - 33m barrels per day.
 
OPEC will agree with the oil production levels of individual countries at its 30th November 2016 meeting. After OPEC reach its target, it will seek support from non-member oil producers to further ease the global glut.

Due to the limitation of the crude oil production level, Brent Crude's oil prices have risen up by 5.9% while the US West Texas Intermediate rose by 5.3%
Topic covered: Demand and supply (Government intervention)
https://www.theguardian.com/business/2016/sep/29/oil-prices-rise-6-opec-agrees-limit-crude-output

2) The oil market is an oligopoly which refers to a market that contains very few industries which have maximum market shares. Not only that, all the industries will know the actions done among each other.

Characteristics of oligopoly includes:
a) The major firms work together to maintain output and pricing to have increasing profits.
b) It is not easy to enter into the market as there are a lot of high costs.
c) The technology used for production should be stable. If there is any creation of advanced technology, it will result in countries taking advantage of it to drive other firms out of business by decreasing the price and affecting the whole market.

According to the respective characteristics stated above, the oil industry is an oligopoly market.
a) In the oil industry, the firms would want to have a long-run business and earn good profits by not decreasing the prices of the crude oil.
b) You will need a lot of technology such as drilling, with an operator firm and manpower to extract crude oil. Therefore, a high cost is required to enter into this market.
c) From the table provided below, it can be seen that in the oil industry, very few firms have control over the market so this resulted in having very few firms having maximum market shares.

http://crudecompanion.com/oligopolistic-nature-of-oil/
Topic covered: Oligopoly (proving oil is oligopoly)

3) There will be another decrease in the oil prices as the oil industry's demand and supply problem will not be solved that quickly. The global oil demand growth is increasing at a slower speed than expected. In the third quarter of 2016, the forecast expects an increase of 1.3mb/d, but it is lesser than that.
The oil industry will continue to have surpluses, due to having a higher supply than demand, until the end of the first half of 2017.

The oil industry is not attaining market equilibrium, which refers to the decrease in supply and increase in demand. In fact, it is the opposite way around where there is an increase in supply and decrease in demand.
Topic covered: Demand and supply
http://www.businessinsider.sg/iea-oil-market-report-for-september-2016-2016-9/#cPfwgFeCExLmXSOw.97]]> 2016-12-29 07:25:02 UTC https://padlet.com/daynachiong1/eze47hl7nxwr/wish/144864804 https://padlet.com/daynachiong1/eze47hl7nxwr/wish/144866555 World production of oil increased very slightly during the years of 2005-2013, where there was a huge increase of the demand of oil due to emerging economies. As there was an increase in the demand, sellers took advantage of the situation and increased the selling price of oil. As a result, the price ceiling was broken by a surge in world oil production; beginning with the US oil price market.
Topic covered: Demand and supply (government intervention, price ceiling)
http://oilprice.com/Energy/Oil-Prices/What-Drove-The-2016-Oil-Price-Rise.html
Increasing demand for oil is a harbinger of better economic growth. Limiting supply, on the other hand, can have undesired economic consequences. In a tepid economy, like our current one, supply-driven price increases act as a tax and slow discretionary consumption. As gas prices rise for consumers, there is less money left over for discretionary spending and savings.
Oil stocks are doing well on the news. Along with bank stocks, they have been among the best performers of the past 30 days. Oil producers and services have struggled to maintain profit margins as the price per barrel declined from $100 to $36. The current rebound above $50 offers a sigh of relief. But without organic economic growth, and with the likelihood that the OPEC agreement will be tenuous at best, one must ask how long higher prices can be maintained.
Topic covered: Demand and Supply [CHOSEN]
http://www.cnbc.com/2016/12/06/oil-prices-jumped-40-this-year-but-dont-get-too-excited-commentary.html ]]> 2016-12-29 09:15:36 UTC https://padlet.com/daynachiong1/eze47hl7nxwr/wish/144866555