March 30 -- OPEC, the International Energy Agency and the International Energy Forum will announce a “joint action plan” this week to combat oil-market volatility, IEA Executive Director Nobuo Tanaka said.
The plan will tackle “volatility of the price and other issues like the outlook of the energy market,” he told reporters yesterday before the biennial IEF ministerial meeting that starts today in Cancun, Mexico. “We’ll have closer dialogue with our organizations and we’ll see what we can do.”
The accord involves pooling expertise and sharing data to improve transparency, two people with direct knowledge of the plan said. They declined to be identified because the information hadn’t been made public. Details of the agreement will be announced March 31 at the end of the meeting.
Saudi Arabian Oil Minister Ali al-Naimi and U.S. Deputy Energy Secretary Daniel Poneman, representing the world’s biggest oil exporter and the largest consumer, are among officials from more than 60 countries attending the gathering. Chief executive officers from some of the largest oil companies, including Exxon Mobil Corp.’s Rex Tillerson and Royal Dutch Shell Plc’s Peter Voser, will join a concurrent business forum.
IEF Secretary General Noe van Hulst said in an interview on March 28 in Cancun that oil producers and consumers, trying to avoid a repeat of the $115 a-barrel price swing in 2008, will seek a “broad agreement” to combat volatility.
“The better the market is informed about what happened in the past, what’s happening in the present and what will happen in the future, the less room there will be for, say, unfounded speculation and second-guessing,” he said.
G-8 Mandate
The Group of Eight nations called for measures to curb volatility in energy prices in July at its L’Aquila, Italy, meeting, to enable oil producers to plan their spending. The G- 8’s formal statement called for continued dialogue between energy producing, consuming and transit countries through the Riyadh-based IEF.
Members account for more than 90 percent of global oil and gas supply and demand.
The Organization of Petroleum Exporting Countries, the IEA and IEF “should work hard together to reduce volatility,” OPEC Secretary-General Abdalla El-Badri told reporters in Cancun yesterday. He called the IEF “a good vehicle” for dialogue.
El-Badri also applauded the U.S. for “putting some brakes on speculation. It’s a positive step in the right direction.”
Oil’s climb to a record $147.27 a barrel in 2008 led regulators in the U.S. and U.K., home to the world’s two major oil exchanges, to consider trading limits on the commodity.
CFTC Limits
The U.S. Commodity Futures Trading Commission, which oversees more than $5 trillion in daily trading, in January proposed adding limits to the energy markets as part of a government campaign to prevent individuals or companies from gaining too much control of a commodity market.
The market needs better data on supply, demand and output levels from all producing and consuming countries, particularly those from nations outside the Organization for Economic Cooperation and Development, Van Hulst said. Improvements in futures-market transparency are also needed, he said.
Non-OECD countries such as China and India are forecast to drive energy-demand growth after the global economic recession.
“Transparency is one of the themes of the times, particularly after 2008,” Daniel Yergin, chairman of IHS Cambridge Energy Research Associates, said in an interview earlier this month in Houston. “Understanding demand better on a global basis, particularly where the growth is, and at the same time better understanding supply would at least ground markets more in the realities of supply and demand.”
Implied Volatility
Oil prices traded between $32.40 a barrel and $147.27 a barrel in 2008. Implied volatility for at-the-money options expiring in 30 days, a measure of expected price swings in the futures contract and a key gauge of options prices, climbed to 105 percent at the end of 2008.
Implied volatility fell to 27.8 percent on March 26, the lowest level since Dec. 24, 2007. Oil has traded in a $68-to-$84 range since October.
Sudden accelerations in oil prices hurt consumers because they cause inflation and reduce spending, curbing economic growth. A plunge in prices affects investment in future supplies by both publicly traded and state-owned oil companies.
“Being against excess volatility is kind of like being against world hunger,” said David Kirsch, the Kansas City, Kansas-based director of oil markets at consultant PFC Energy. “Who’s for it? At the end of the day, what are you going to do about it?”
Crude for May delivery rose $2.17, or 2.7 percent, to $82.17 a barrel on the New York Mercantile Exchange yesterday, the highest settlement since March 18 and the biggest gain since Feb. 16. The increase caused implied volatility to rebound to 28.5 percent. Oil was at $82.12 in after-hours trading at 10:46 a.m. in Singapore.
Source: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=amQzcCkCvul4
The plan will tackle “volatility of the price and other issues like the outlook of the energy market,” he told reporters yesterday before the biennial IEF ministerial meeting that starts today in Cancun, Mexico. “We’ll have closer dialogue with our organizations and we’ll see what we can do.”
The accord involves pooling expertise and sharing data to improve transparency, two people with direct knowledge of the plan said. They declined to be identified because the information hadn’t been made public. Details of the agreement will be announced March 31 at the end of the meeting.
Saudi Arabian Oil Minister Ali al-Naimi and U.S. Deputy Energy Secretary Daniel Poneman, representing the world’s biggest oil exporter and the largest consumer, are among officials from more than 60 countries attending the gathering. Chief executive officers from some of the largest oil companies, including Exxon Mobil Corp.’s Rex Tillerson and Royal Dutch Shell Plc’s Peter Voser, will join a concurrent business forum.
IEF Secretary General Noe van Hulst said in an interview on March 28 in Cancun that oil producers and consumers, trying to avoid a repeat of the $115 a-barrel price swing in 2008, will seek a “broad agreement” to combat volatility.
“The better the market is informed about what happened in the past, what’s happening in the present and what will happen in the future, the less room there will be for, say, unfounded speculation and second-guessing,” he said.
G-8 Mandate
The Group of Eight nations called for measures to curb volatility in energy prices in July at its L’Aquila, Italy, meeting, to enable oil producers to plan their spending. The G- 8’s formal statement called for continued dialogue between energy producing, consuming and transit countries through the Riyadh-based IEF.
Members account for more than 90 percent of global oil and gas supply and demand.
The Organization of Petroleum Exporting Countries, the IEA and IEF “should work hard together to reduce volatility,” OPEC Secretary-General Abdalla El-Badri told reporters in Cancun yesterday. He called the IEF “a good vehicle” for dialogue.
El-Badri also applauded the U.S. for “putting some brakes on speculation. It’s a positive step in the right direction.”
Oil’s climb to a record $147.27 a barrel in 2008 led regulators in the U.S. and U.K., home to the world’s two major oil exchanges, to consider trading limits on the commodity.
CFTC Limits
The U.S. Commodity Futures Trading Commission, which oversees more than $5 trillion in daily trading, in January proposed adding limits to the energy markets as part of a government campaign to prevent individuals or companies from gaining too much control of a commodity market.
The market needs better data on supply, demand and output levels from all producing and consuming countries, particularly those from nations outside the Organization for Economic Cooperation and Development, Van Hulst said. Improvements in futures-market transparency are also needed, he said.
Non-OECD countries such as China and India are forecast to drive energy-demand growth after the global economic recession.
“Transparency is one of the themes of the times, particularly after 2008,” Daniel Yergin, chairman of IHS Cambridge Energy Research Associates, said in an interview earlier this month in Houston. “Understanding demand better on a global basis, particularly where the growth is, and at the same time better understanding supply would at least ground markets more in the realities of supply and demand.”
Implied Volatility
Oil prices traded between $32.40 a barrel and $147.27 a barrel in 2008. Implied volatility for at-the-money options expiring in 30 days, a measure of expected price swings in the futures contract and a key gauge of options prices, climbed to 105 percent at the end of 2008.
Implied volatility fell to 27.8 percent on March 26, the lowest level since Dec. 24, 2007. Oil has traded in a $68-to-$84 range since October.
Sudden accelerations in oil prices hurt consumers because they cause inflation and reduce spending, curbing economic growth. A plunge in prices affects investment in future supplies by both publicly traded and state-owned oil companies.
“Being against excess volatility is kind of like being against world hunger,” said David Kirsch, the Kansas City, Kansas-based director of oil markets at consultant PFC Energy. “Who’s for it? At the end of the day, what are you going to do about it?”
Crude for May delivery rose $2.17, or 2.7 percent, to $82.17 a barrel on the New York Mercantile Exchange yesterday, the highest settlement since March 18 and the biggest gain since Feb. 16. The increase caused implied volatility to rebound to 28.5 percent. Oil was at $82.12 in after-hours trading at 10:46 a.m. in Singapore.
Source: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=amQzcCkCvul4
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