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Saturday, 10 February 18
OIL PRICE USD 100/BARREL BY END OF 2018! - SAROJ MOHAPATRA
.jpg) All demand supplies calculations are going wrong in oil market at present. US production is increasing at a good pace and set to topple Saudi comfortably as the world’s largest crude producer and to break its previous record of 10.7 Million bpd very soon, registered way back in 1970. Still the investment banks are moderating their previous estimates northwards. Recently JP Morgan estimated 2018 average oil price at USD 70 per barrel, which is approx. 50% higher than its estimates published just six months before. Goldman Sachs went one step ahead by forecasting the 2018 price at USD 80. These estimates are happening against the backdrop of known news of increased oil production from Kazakhstan and Nigeria offshore and ramp up in Libya and may be Venezuela in 2018. Also nobody expects that the winter across globe will be as cruel as in 2017.
In last article it was discussed that US, Russia, Saudi Arab have a good say in affecting the trend of oil price. They together produce appox 30 million bpd of oil against total world’s production of 80 million bpd i.e aprox 40%. Until 6-10 years before Saudi Arab was playing a pivot role in balancing the oil price as a swing producer.
As a swing supplier Saudi Arab was very much successful in limiting the price rise of crude upto good extent despite higher demand from both developed and developing economies. Now from demand side there seem to be no significant boost because of no extraordinary economic growth in China and India. Already the demands in developed countries like EU, Japan, South Korea etc except US are almost stagnant.
Now let us come to our subject line how higher oil price is the new reality in 2018. We are forgetting about a huge event that was missed in 2017 and set to happen in late 2018. It’s the world’s largest ever IPO of Saudi Aramco. For 5% disinvestment, Saudi Govt expects to earn more than USD 100 billion. Apart from income through IPO, the most important thing is the valuation of Saudia Aramco as a whole which will be calculated after IPO. US has also good existing interests in Saudi Aramco. Even investment bankers will earn directly as a stakeholder of IPO. Indirectly there is a golden opportunity to earn billions through derivative market of oil. As per recent report, hedge funds have increased their bullish position in oil, despite the fact that oil has reached the highest level of 2014. Net long positions have been raised across WTI, Brent, NYMEX, ICE, US gasoline etc. Now the ratio of hedge long position to short position has reached 11.5 against the same ratio of 1.5 in June 2017 i.e just few months back. It shows how bullish the market is but may be in hibernation show J . Last year it seems the said IPO was delayed just because the oil price was low (relative to expectation of Saudi Arab), though other reasons of no-decision of IPO subscription market place whther Newyork or london exchange were cited.
It is indeed a last opportunity in front of Saudi arab to earn billions just by selling a small stake in company. This is at a time when big economies like UK, France China have decided to go away from liquid fuel in transportation and industrial sector except petrochemicals (where refined products will be used as feed) by 2030-35. In 2008 when oil touched its peak, Saudi arab produced around 8.5 Million bpd. Lets imagine in case now Saudi Arab lowers its production to 8.5 mbpd or even lower, USD 100 per barerl is simply just a cakewalk for Oil.
Saudi Arab’s dynamic, modern-age and powerful crown prince Muhammad Bin Salman estimates the value of Saudi Aramco more than USD 2 Trillion, which is even more than GDP of almost all countries except 5 or 6. Saudi Arab may also try to disinvest more than 5% as an last attempt to have higher earnings. For that Oil need to be shown off to the outside world very bullish.
Therefore it may be concluded that Saudi Arab is in the process of cutting its oil production in a larger volume (against the official published figures) or will cut aggressively in future as against present rate just to ensure oil price is at higher side by the expected timeline of IPO i.e. Oct 2018. It also may have taken the investment bankers into confidence to ensure high over subscription of world’s largest ever IPO possible. The volume of long positions of hedge funds and money managers are probably just indication.
Just tried to put forward the thought on an idle weekend :) along with logic. Lets See what actually happens finally by dawn of 2019 :).
Saroj Mohapatra
DGM - Marketing and Contracts at H-Energy Group Of Companies
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Monday, 08 January 24
KOSPO TO BUY 80000 MT OF INDONESIAN LOW CALORIFIC VALUE COAL FOR FEB 2024
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for the supply of Indonesian Low Calorific Value Coal from qualified suppliers for Korean ...
Monday, 08 January 24
SEABORNE TRADE REACHES 12.4BN TONNES - CLARKSONS
China will establish a back-up coal production system by 2027 to stabilise prices and secure coal supply, the state planner said on Wednesday, even ...
Monday, 08 January 24
CAPESIZES START THE NEW YEAR ON POSITIVE NOTE - BALTIC EXCHANGE
Capesize
This week the capsize market has been marked by a mix of activities and challenges. Despite a slow start following the Christmas and N ...
Friday, 05 January 24
MORGAN STANLEY SEES LOWER OIL PRICES IN 2024 ON OVERSUPPLY CONCERNS - REUTERS
Morgan Stanley sees Brent crude prices anchored near $80 per barrel in the first half in 2024 before declining towards the end of the year as it ex ...
Friday, 05 January 24
INDIA'S COAL OUTPUT RISES NEARLY 11 PC IN DEC TO 92.87 MT - PTI
India’s coal production increased by 10.75 per cent to 92.87 million tonne in December 2023 as compared to the year-ago period, an official s ...
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- Medco Energi Mining Internasional
- Essar Steel Hazira Ltd - India
- Ind-Barath Power Infra Limited - India
- India Bulls Power Limited - India
- Port Waratah Coal Services - Australia
- Coalindo Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kaltim Prima Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Bhushan Steel Limited - India
- Australian Commodity Traders Exchange
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- The State Trading Corporation of India Ltd
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- Parliament of New Zealand
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- Ministry of Mines - Canada
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- IEA Clean Coal Centre - UK
- Kepco SPC Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- MS Steel International - UAE
- San Jose City I Power Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Economic Council, Georgia
- Samtan Co., Ltd - South Korea
- Planning Commission, India
- SMG Consultants - Indonesia
- Independent Power Producers Association of India
- Georgia Ports Authority, United States
- Deloitte Consulting - India
- Trasteel International SA, Italy
- Standard Chartered Bank - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Energy - Thailand
- Savvy Resources Ltd - HongKong
- Gujarat Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Mercuria Energy - Indonesia
- Heidelberg Cement - Germany
- GMR Energy Limited - India
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- Antam Resourcindo - Indonesia
- Electricity Authority, New Zealand
- Mercator Lines Limited - India
- Malabar Cements Ltd - India
- Bhatia International Limited - India
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- Bank of Tokyo Mitsubishi UFJ Ltd
- South Luzon Thermal Energy Corporation
- VISA Power Limited - India
- Thai Mozambique Logistica
- Pendopo Energi Batubara - Indonesia
- Star Paper Mills Limited - India
- Videocon Industries ltd - India
- Posco Energy - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Baramulti Group, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Indian Oil Corporation Limited
- Maharashtra Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
- Petron Corporation, Philippines
- Mintek Dendrill Indonesia
- SN Aboitiz Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- London Commodity Brokers - England
- Rashtriya Ispat Nigam Limited - India
- Australian Coal Association
- Sarangani Energy Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Karaikal Port Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coal and Oil Company - UAE
- SMC Global Power, Philippines
- Goldman Sachs - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Therma Luzon, Inc, Philippines
- The Treasury - Australian Government
- Tata Chemicals Ltd - India
- Kartika Selabumi Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Energy Link Ltd, New Zealand
- Cigading International Bulk Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Coastal Gujarat Power Limited - India
- PNOC Exploration Corporation - Philippines
- Energy Development Corp, Philippines
- Bulk Trading Sa - Switzerland
- Eastern Coal Council - USA
- GVK Power & Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- ICICI Bank Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Finance - Indonesia
- Iligan Light & Power Inc, Philippines
- Interocean Group of Companies - India
- Anglo American - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Global Business Power Corporation, Philippines
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- Kohat Cement Company Ltd. - Pakistan
- Manunggal Multi Energi - Indonesia
- Sojitz Corporation - Japan
- Edison Trading Spa - Italy
- CNBM International Corporation - China
- Orica Mining Services - Indonesia
- Kobexindo Tractors - Indoneisa
- Thiess Contractors Indonesia
- Timah Investasi Mineral - Indoneisa
- New Zealand Coal & Carbon
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- Vizag Seaport Private Limited - India
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- Electricity Generating Authority of Thailand
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- Holcim Trading Pte Ltd - Singapore
- Meralco Power Generation, Philippines
- Bharathi Cement Corporation - India
- Indian Energy Exchange, India
- Semirara Mining and Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Siam City Cement - Thailand
- International Coal Ventures Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Attock Cement Pakistan Limited
- Aditya Birla Group - India
- Krishnapatnam Port Company Ltd. - India
- Meenaskhi Energy Private Limited - India
- Wood Mackenzie - Singapore
- Minerals Council of Australia
- Indonesian Coal Mining Association
- LBH Netherlands Bv - Netherlands
- Madhucon Powers Ltd - India
- European Bulk Services B.V. - Netherlands
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- CIMB Investment Bank - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- White Energy Company Limited
- Marubeni Corporation - India
- Uttam Galva Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Aboitiz Power Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Sinarmas Energy and Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Mjunction Services Limited - India
- OPG Power Generation Pvt Ltd - India
- Agrawal Coal Company - India
- Altura Mining Limited, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Sidhee Cement - India
- Global Coal Blending Company Limited - Australia
- Borneo Indobara - Indonesia
- PowerSource Philippines DevCo
- Rio Tinto Coal - Australia
- PetroVietnam Power Coal Import and Supply Company
- Intertek Mineral Services - Indonesia
- Chamber of Mines of South Africa
- Sical Logistics Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bangladesh Power Developement Board
- Bukit Makmur.PT - Indonesia
- Larsen & Toubro Limited - India
- Xindia Steels Limited - India
- Wilmar Investment Holdings
- Romanian Commodities Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Ambuja Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Leighton Contractors Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
- Indogreen Group - Indonesia
- Renaissance Capital - South Africa
- Oldendorff Carriers - Singapore
- Riau Bara Harum - Indonesia
- McConnell Dowell - Australia
- Grasim Industreis Ltd - India
- The University of Queensland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sindya Power Generating Company Private Ltd
- ASAPP Information Group - India
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Transport, Egypt
- Africa Commodities Group - South Africa
- Orica Australia Pty. Ltd.
- Indika Energy - Indonesia
- Cement Manufacturers Association - India
- TeaM Sual Corporation - Philippines
- Commonwealth Bank - Australia
- GAC Shipping (India) Pvt Ltd
- Jorong Barutama Greston.PT - Indonesia
- Carbofer General Trading SA - India
- Straits Asia Resources Limited - Singapore
- Sakthi Sugars Limited - India
- Power Finance Corporation Ltd., India
- Sree Jayajothi Cements Limited - India
- Kumho Petrochemical, South Korea
- Toyota Tsusho Corporation, Japan
- Miang Besar Coal Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
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