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Oil analysts: look for wholesale pricing volatility into next year at least

Volatility in pricing will be the “norm” for the forseeable future, said analysts.

The Trucker Staff

11/16/2012

“Wild” wholesale oil price swings are likely to prevail into 2013 and possibly into 2014, oil analysts said Nov. 15 during a webinar on oil price volatility and related issues.

Wild wholesale [price] swings will prevail at least into 2013, noted Tom Kloza, chief oil analyst and a founder of the Oil Price Information Service.

“You almost need a scorecard to keep up with crude oil and gasoline and diesel prices in North America,” Kloza, the webinar moderator, stated. In the next 14 months, crude prices could see some intense volatility, he added.

The oil market is a great deal more complex than it was in the early 2000s, noted Patrick Reames, managing director of CommodityPoint, a division of UtiliPoint International.

Prices are driven by even regional marketplaces while oil is at the same time a true global commodity, he said.

There are new players in the marketplace, noted Reames. Traders have greater portfolios with oil and associated markets coming in and out, such as ethanol. And of course, speculators continue to drive prices, too.

The supply chain with petroleum and petroleum-based products is extremely complex, plus the oil industry is seeing increased regulatory oversight, Reames said, with Kloza chiming in that the impact of regulations on the oil industry are underestimated by many.

“Perhaps a political change [in the Whitehouse] would have seen less regulations but that’s not going to happen,” Kloza said.

He said the complexity of the oil markets, the price volatility and regulations contribute to price gyrations and consequently, “nefarious motives are attached to the industry which don’t exist.”

Not surprisingly, a quick survey of oil and related business representatives listening to the webinar showed that forecasting and tracking demand for oil was their greatest concern.

In fact, analysts concluded, oil market pricing is no longer just a matter of simple supply and demand because so many other factors come into play.

Another conclusion? Volatility in pricing will be the “norm” for the forseeable future.

The Trucker staff can be reached to comment on this article at editor@thetrucker.com.

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