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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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Wednesday, 22 November 23
INDIA: GOVERNMENT PLANS 1.4 BILLION TONNE COAL OUTPUT BY 2027 - LIVEMINT
The Union coal ministry on Monday announced plans to increase India’s coal production to 1.404 billion tonne by 2027, with an eye to further ...
Wednesday, 22 November 23
OBLIGATION. INDONESIA AIMS TO START COLLECTING LEVIES FROM COAL MINERS IN JANUARY - REUTERS
Indonesia plans to start collecting levies from coal miners in January to be used to compensate miners who sell coal to the state utility at lower ...
Tuesday, 21 November 23
INDIAN COAL POWER PLANTS’ CAPACITY UTILISATION WILL IMPROVE TO 65% THIS FISCAL: - CRISIL
Coal-based thermal power units’ plant load factor (PLF) or capacity utilisation will improve to 65 percent in the current fiscal year despite ...
Tuesday, 14 November 23
CAPITAL PRODUCT PARTNERS L.P. ANNOUNCES TRANSFORMATIVE TRANSACTION INCLUDING THE ACQUISITION OF 11 NEWBUILD LNG CARRIERS FOR $3.1 BILLION
Capital Product Partners L.P. announced that it has entered into an umbrella agreement (the “Umbrella Agreement”) with Capital Maritime ...
Tuesday, 14 November 23
COAL INDIA BEATS Q2 PROFIT VIEW ON HIGH POWER DEMAND AMID WEAK MONSOON - REUTERS
Coal India on Friday reported better-than-expected second-quarter profit, helped by high power demand and boosted production amid a weak monsoon.
...
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- Star Paper Mills Limited - India
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- Bank of Tokyo Mitsubishi UFJ Ltd
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- Samtan Co., Ltd - South Korea
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- Petron Corporation, Philippines
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- Georgia Ports Authority, United States
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- CNBM International Corporation - China
- The University of Queensland
- Energy Link Ltd, New Zealand
- Aditya Birla Group - India
- Gujarat Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- McConnell Dowell - Australia
- Edison Trading Spa - Italy
- Orica Mining Services - Indonesia
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- Power Finance Corporation Ltd., India
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- Xindia Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- India Bulls Power Limited - India
- Global Business Power Corporation, Philippines
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- Merrill Lynch Commodities Europe
- Simpson Spence & Young - Indonesia
- Tamil Nadu electricity Board
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- Gujarat Sidhee Cement - India
- Timah Investasi Mineral - Indoneisa
- Bhushan Steel Limited - India
- Kaltim Prima Coal - Indonesia
- ASAPP Information Group - India
- Price Waterhouse Coopers - Russia
- PowerSource Philippines DevCo
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- Economic Council, Georgia
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- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- SN Aboitiz Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Latin American Coal - Colombia
- Madhucon Powers Ltd - India
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- Australian Coal Association
- Neyveli Lignite Corporation Ltd, - India
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- Formosa Plastics Group - Taiwan
- VISA Power Limited - India
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- Bahari Cakrawala Sebuku - Indonesia
- Heidelberg Cement - Germany
- Malabar Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Krishnapatnam Port Company Ltd. - India
- Goldman Sachs - Singapore
- Eastern Coal Council - USA
- Kartika Selabumi Mining - Indonesia
- Salva Resources Pvt Ltd - India
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- Kohat Cement Company Ltd. - Pakistan
- Orica Australia Pty. Ltd.
- Anglo American - United Kingdom
- Eastern Energy - Thailand
- SMG Consultants - Indonesia
- Minerals Council of Australia
- CIMB Investment Bank - Malaysia
- Chettinad Cement Corporation Ltd - India
- Barasentosa Lestari - Indonesia
- PTC India Limited - India
- Globalindo Alam Lestari - Indonesia
- Wilmar Investment Holdings
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- Antam Resourcindo - Indonesia
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- PNOC Exploration Corporation - Philippines
- Wood Mackenzie - Singapore
- Dalmia Cement Bharat India
- Indian Oil Corporation Limited
- Kepco SPC Power Corporation, Philippines
- Deloitte Consulting - India
- Ministry of Transport, Egypt
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- Pendopo Energi Batubara - Indonesia
- Makarim & Taira - Indonesia
- Sakthi Sugars Limited - India
- Bukit Baiduri Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Energy Development Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Attock Cement Pakistan Limited
- Meenaskhi Energy Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Sojitz Corporation - Japan
- Straits Asia Resources Limited - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coal and Oil Company - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Interocean Group of Companies - India
- Directorate Of Revenue Intelligence - India
- Larsen & Toubro Limited - India
- Indo Tambangraya Megah - Indonesia
- Bulk Trading Sa - Switzerland
- European Bulk Services B.V. - Netherlands
- White Energy Company Limited
- IEA Clean Coal Centre - UK
- Savvy Resources Ltd - HongKong
- Ministry of Finance - Indonesia
- International Coal Ventures Pvt Ltd - India
- Carbofer General Trading SA - India
- Kobexindo Tractors - Indoneisa
- Singapore Mercantile Exchange
- Independent Power Producers Association of India
- GAC Shipping (India) Pvt Ltd
- Gujarat Mineral Development Corp Ltd - India
- Posco Energy - South Korea
- Port Waratah Coal Services - Australia
- Sree Jayajothi Cements Limited - India
- Riau Bara Harum - Indonesia
- Cement Manufacturers Association - India
- San Jose City I Power Corp, Philippines
- Vedanta Resources Plc - India
- MS Steel International - UAE
- Vizag Seaport Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Bhatia International Limited - India
- Lanco Infratech Ltd - India
- Planning Commission, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Essar Steel Hazira Ltd - India
- The Treasury - Australian Government
- Bukit Asam (Persero) Tbk - Indonesia
- Altura Mining Limited, Indonesia
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