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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, 02 August 24
COAL MARKET DEVELOPMENTS: FALLING PRICES AMID RECORD-HIGH OUTPUT - WORLD BANK
Coal prices inched up in May (m/m) following an 8 percent decline in 2024Q1. The Australian and South African benchmarks have plummeted more ...
Friday, 26 July 24
FUELEU MARITME IS COMING. IS YOUR CHARTERPARTY READY? - GARD
With less than six months to implementation of FuelEU Maritime in EU and EEA trades, there has been little published advice regarding how to alloca ...
Thursday, 04 July 24
INDIA'S COAL PRODUCTION RISES 14% IN JUNE - PTI
The country’s coal production rose by 14.49% to 84.63 million tonne (MT) in June. The country’s coal output was 73.92 MT in June last f ...
Tuesday, 02 July 24
NTPC CAPTIVE COAL OUTPUT GROWS 15% IN Q1; DESPATCH RISES 17%
State-owned NTPC on Monday reported a 15 per cent year-on-year increase in the production of coal from captives mines to 9.862 metric million tonne ...
Friday, 28 June 24
KOSPO INVITED BIDS FOR 400,000 MT OF MINIMUM 4000 NCV COAL FOR FIVE YEARS
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for total 400,000 MT of Low Calorific Value Coal for 5 years starting from July 2024 until ...
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- IEA Clean Coal Centre - UK
- Toyota Tsusho Corporation, Japan
- Carbofer General Trading SA - India
- Bulk Trading Sa - Switzerland
- Petrochimia International Co. Ltd.- Taiwan
- Iligan Light & Power Inc, Philippines
- Georgia Ports Authority, United States
- Gujarat Mineral Development Corp Ltd - India
- Indogreen Group - Indonesia
- Ministry of Mines - Canada
- Kobexindo Tractors - Indoneisa
- Africa Commodities Group - South Africa
- Meenaskhi Energy Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Leighton Contractors Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- Videocon Industries ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wilmar Investment Holdings
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement PLC, Thailand
- Bhatia International Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- PTC India Limited - India
- Energy Development Corp, Philippines
- Thiess Contractors Indonesia
- OPG Power Generation Pvt Ltd - India
- Mercuria Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Eastern Energy - Thailand
- Marubeni Corporation - India
- Sree Jayajothi Cements Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Edison Trading Spa - Italy
- AsiaOL BioFuels Corp., Philippines
- Power Finance Corporation Ltd., India
- Thai Mozambique Logistica
- Anglo American - United Kingdom
- International Coal Ventures Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Global Business Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Posco Energy - South Korea
- Tamil Nadu electricity Board
- Indonesian Coal Mining Association
- PNOC Exploration Corporation - Philippines
- Price Waterhouse Coopers - Russia
- LBH Netherlands Bv - Netherlands
- Tata Chemicals Ltd - India
- Deloitte Consulting - India
- Barasentosa Lestari - Indonesia
- Australian Commodity Traders Exchange
- Rashtriya Ispat Nigam Limited - India
- Ministry of Transport, Egypt
- Sinarmas Energy and Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Mjunction Services Limited - India
- Dalmia Cement Bharat India
- San Jose City I Power Corp, Philippines
- Jindal Steel & Power Ltd - India
- Vizag Seaport Private Limited - India
- Minerals Council of Australia
- Bukit Baiduri Energy - Indonesia
- Oldendorff Carriers - Singapore
- Antam Resourcindo - Indonesia
- Bhoruka Overseas - Indonesia
- Pendopo Energi Batubara - Indonesia
- Merrill Lynch Commodities Europe
- Latin American Coal - Colombia
- Parliament of New Zealand
- The State Trading Corporation of India Ltd
- Wood Mackenzie - Singapore
- CNBM International Corporation - China
- Simpson Spence & Young - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Agrawal Coal Company - India
- Uttam Galva Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Port Waratah Coal Services - Australia
- Bayan Resources Tbk. - Indonesia
- Salva Resources Pvt Ltd - India
- ASAPP Information Group - India
- Heidelberg Cement - Germany
- Larsen & Toubro Limited - India
- Jaiprakash Power Ventures ltd
- Therma Luzon, Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- ICICI Bank Limited - India
- Binh Thuan Hamico - Vietnam
- Sindya Power Generating Company Private Ltd
- Goldman Sachs - Singapore
- Indika Energy - Indonesia
- Sakthi Sugars Limited - India
- Central Java Power - Indonesia
- Grasim Industreis Ltd - India
- CIMB Investment Bank - Malaysia
- Australian Coal Association
- Indian Oil Corporation Limited
- Bangladesh Power Developement Board
- Bhushan Steel Limited - India
- Singapore Mercantile Exchange
- VISA Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Sojitz Corporation - Japan
- Commonwealth Bank - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Energy Exchange, India
- Eastern Coal Council - USA
- Semirara Mining and Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- London Commodity Brokers - England
- TeaM Sual Corporation - Philippines
- McConnell Dowell - Australia
- Makarim & Taira - Indonesia
- Parry Sugars Refinery, India
- Altura Mining Limited, Indonesia
- Borneo Indobara - Indonesia
- Coal and Oil Company - UAE
- Electricity Generating Authority of Thailand
- Orica Mining Services - Indonesia
- Interocean Group of Companies - India
- Metalloyd Limited - United Kingdom
- Lanco Infratech Ltd - India
- Aditya Birla Group - India
- Independent Power Producers Association of India
- Vedanta Resources Plc - India
- Medco Energi Mining Internasional
- Krishnapatnam Port Company Ltd. - India
- Meralco Power Generation, Philippines
- SN Aboitiz Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Sical Logistics Limited - India
- Riau Bara Harum - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Global Green Power PLC Corporation, Philippines
- Baramulti Group, Indonesia
- GMR Energy Limited - India
- Banpu Public Company Limited - Thailand
- Directorate General of MIneral and Coal - Indonesia
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- Orica Australia Pty. Ltd.
- Globalindo Alam Lestari - Indonesia
- PowerSource Philippines DevCo
- Economic Council, Georgia
- Essar Steel Hazira Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Aboitiz Power Corporation - Philippines
- New Zealand Coal & Carbon
- White Energy Company Limited
- Cement Manufacturers Association - India
- Ceylon Electricity Board - Sri Lanka
- GVK Power & Infra Limited - India
- Kaltim Prima Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- Maheswari Brothers Coal Limited - India
- Bharathi Cement Corporation - India
- Gujarat Sidhee Cement - India
- Kalimantan Lumbung Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Offshore Bulk Terminal Pte Ltd, Singapore
- India Bulls Power Limited - India
- Malabar Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Electricity Authority - India
- South Luzon Thermal Energy Corporation
- The University of Queensland
- Ambuja Cements Ltd - India
- Star Paper Mills Limited - India
- Ministry of Finance - Indonesia
- Coalindo Energy - Indonesia
- Semirara Mining Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Romanian Commodities Exchange
- Mercator Lines Limited - India
- Alfred C Toepfer International GmbH - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- Karaikal Port Pvt Ltd - India
- Electricity Authority, New Zealand
- Renaissance Capital - South Africa
- Rio Tinto Coal - Australia
- Petron Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Standard Chartered Bank - UAE
- IHS Mccloskey Coal Group - USA
- Neyveli Lignite Corporation Ltd, - India
- The Treasury - Australian Government
- Cigading International Bulk Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
- Kumho Petrochemical, South Korea
- Attock Cement Pakistan Limited
- Xindia Steels Limited - India
- Chamber of Mines of South Africa
- MS Steel International - UAE
- Savvy Resources Ltd - HongKong
- Mintek Dendrill Indonesia
- Billiton Holdings Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- SMG Consultants - Indonesia
- GAC Shipping (India) Pvt Ltd
- Kideco Jaya Agung - Indonesia
- Samtan Co., Ltd - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Karbindo Abesyapradhi - Indoneisa
- Sarangani Energy Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Trasteel International SA, Italy
- Siam City Cement - Thailand
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