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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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Friday, 05 January 24
BANGLADESH’S 2023 COAL-FIRED POWER OUTPUT TRIPLED, EASING SHORTAGES - REUTERS
Bangladesh nearly tripled its coal-fired power output in 2023, a Reuters analysis of government data showed, helping it tide over the worst power s ...
Tuesday, 02 January 24
COAL TRADE CONTINUES TO HEAD EAST - BALTIC EXCHANGE
The global coal trade, once concentrated in the Pacific and Atlantic basins, is undergoing a significant transformation, as highlighted in the Inte ...
Tuesday, 02 January 24
COAL CARGOES: AVOIDING EXPLOSION AND SELF-HEATING - GARD
KNOWLEDGE TO ELEVATE
Despite its contribution to greenhouse gas emissions, global coal consumption climbed to an all-time high in 2022 and is ...
Tuesday, 02 January 24
SINOPEC FORECASTS CHINA’S COAL CONSUMPTION TO PEAK AROUND 2025 - REUTERS
China Petrochemical Corp, or Sinopec, expects coal consumption to peak around 2025 at 4.37 billion metric tons, the state energy group said in an o ...
Thursday, 07 December 23
CHINA TO SET UP COAL PRODUCTION RESERVE TO STABILISE PRICES - REUTERS
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 ...
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- Cigading International Bulk Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Petron Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Borneo Indobara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Africa Commodities Group - South Africa
- Essar Steel Hazira Ltd - India
- Standard Chartered Bank - UAE
- Indogreen Group - Indonesia
- Kaltim Prima Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- Mjunction Services Limited - India
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- SN Aboitiz Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- The Treasury - Australian Government
- Miang Besar Coal Terminal - Indonesia
- SMC Global Power, Philippines
- Iligan Light & Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Kalimantan Lumbung Energi - Indonesia
- Formosa Plastics Group - Taiwan
- Bulk Trading Sa - Switzerland
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- Coastal Gujarat Power Limited - India
- Jindal Steel & Power Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Siam City Cement PLC, Thailand
- CIMB Investment Bank - Malaysia
- Larsen & Toubro Limited - India
- Bangladesh Power Developement Board
- Tata Chemicals Ltd - India
- Directorate Of Revenue Intelligence - India
- Gujarat Mineral Development Corp Ltd - India
- Coalindo Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Star Paper Mills Limited - India
- Meenaskhi Energy Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Siam City Cement - Thailand
- ICICI Bank Limited - India
- Posco Energy - South Korea
- Trasteel International SA, Italy
- Romanian Commodities Exchange
- Billiton Holdings Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- CNBM International Corporation - China
- European Bulk Services B.V. - Netherlands
- Minerals Council of Australia
- Power Finance Corporation Ltd., India
- The University of Queensland
- Salva Resources Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- TeaM Sual Corporation - Philippines
- Chamber of Mines of South Africa
- Pendopo Energi Batubara - Indonesia
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining and Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Asmin Koalindo Tuhup - Indonesia
- Banpu Public Company Limited - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- GMR Energy Limited - India
- IEA Clean Coal Centre - UK
- New Zealand Coal & Carbon
- Malabar Cements Ltd - India
- Australian Commodity Traders Exchange
- Ministry of Finance - Indonesia
- Lanco Infratech Ltd - India
- Thai Mozambique Logistica
- Chettinad Cement Corporation Ltd - India
- Carbofer General Trading SA - India
- Energy Link Ltd, New Zealand
- Sojitz Corporation - Japan
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Sidhee Cement - India
- GVK Power & Infra Limited - India
- Riau Bara Harum - Indonesia
- Merrill Lynch Commodities Europe
- Kobexindo Tractors - Indoneisa
- VISA Power Limited - India
- Mercator Lines Limited - India
- Therma Luzon, Inc, Philippines
- Port Waratah Coal Services - Australia
- Indika Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Agrawal Coal Company - India
- Attock Cement Pakistan Limited
- Manunggal Multi Energi - Indonesia
- Uttam Galva Steels Limited - India
- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- Georgia Ports Authority, United States
- Sarangani Energy Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- White Energy Company Limited
- IHS Mccloskey Coal Group - USA
- AsiaOL BioFuels Corp., Philippines
- Ministry of Transport, Egypt
- Indian Oil Corporation Limited
- GAC Shipping (India) Pvt Ltd
- Parliament of New Zealand
- Central Electricity Authority - India
- ASAPP Information Group - India
- Coal and Oil Company - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Baramulti Group, Indonesia
- Wilmar Investment Holdings
- PowerSource Philippines DevCo
- Bhushan Steel Limited - India
- Anglo American - United Kingdom
- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Barasentosa Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Heidelberg Cement - Germany
- Energy Development Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Aditya Birla Group - India
- Deloitte Consulting - India
- Rio Tinto Coal - Australia
- Binh Thuan Hamico - Vietnam
- Bharathi Cement Corporation - India
- Latin American Coal - Colombia
- Straits Asia Resources Limited - Singapore
- Thiess Contractors Indonesia
- Tamil Nadu electricity Board
- Xindia Steels Limited - India
- Marubeni Corporation - India
- Sindya Power Generating Company Private Ltd
- Orica Mining Services - Indonesia
- Wood Mackenzie - Singapore
- Videocon Industries ltd - India
- LBH Netherlands Bv - Netherlands
- Economic Council, Georgia
- Ministry of Mines - Canada
- Indo Tambangraya Megah - Indonesia
- MS Steel International - UAE
- PNOC Exploration Corporation - Philippines
- Kumho Petrochemical, South Korea
- Kepco SPC Power Corporation, Philippines
- Sical Logistics Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Renaissance Capital - South Africa
- Bhatia International Limited - India
- Jaiprakash Power Ventures ltd
- South Luzon Thermal Energy Corporation
- Electricity Generating Authority of Thailand
- Bhoruka Overseas - Indonesia
- Commonwealth Bank - Australia
- Semirara Mining Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- PTC India Limited - India
- Dalmia Cement Bharat India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Authority, New Zealand
- Price Waterhouse Coopers - Russia
- Goldman Sachs - Singapore
- Meralco Power Generation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Indonesian Coal Mining Association
- Vizag Seaport Private Limited - India
- Sakthi Sugars Limited - India
- Altura Mining Limited, Indonesia
- Savvy Resources Ltd - HongKong
- Mintek Dendrill Indonesia
- Neyveli Lignite Corporation Ltd, - India
- TNB Fuel Sdn Bhd - Malaysia
- Edison Trading Spa - Italy
- Intertek Mineral Services - Indonesia
- Planning Commission, India
- London Commodity Brokers - England
- Cement Manufacturers Association - India
- Global Business Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- SMG Consultants - Indonesia
- Oldendorff Carriers - Singapore
- Sinarmas Energy and Mining - Indonesia
- Madhucon Powers Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Holcim Trading Pte Ltd - Singapore
- Mercuria Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Singapore Mercantile Exchange
- Interocean Group of Companies - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Metalloyd Limited - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Australian Coal Association
- Kapuas Tunggal Persada - Indonesia
- Ambuja Cements Ltd - India
- Eastern Energy - Thailand
- Gujarat Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bayan Resources Tbk. - Indonesia
- Eastern Coal Council - USA
- Parry Sugars Refinery, India
- Medco Energi Mining Internasional
- Kohat Cement Company Ltd. - Pakistan
- Leighton Contractors Pty Ltd - Australia
- Independent Power Producers Association of India
- Vedanta Resources Plc - India
- Karbindo Abesyapradhi - Indoneisa
- Simpson Spence & Young - Indonesia
- Directorate General of MIneral and Coal - Indonesia
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