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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 March 18
ANGLO AMERICAN COMPLETES SALE OF ESKOM-TIED THERMAL COAL OPERATIONS IN SOUTH AFRICA
Anglo American plc (“Anglo American”) confirms completion of the sale of its Eskom-tied domestic thermal coal operations in South Afric ...
Friday, 02 March 18
MORE COAL INQUIRES FROM SOUTH AFRICA TO INDIA; SUPRAS FIXED CA $12K + BB - FEARNLEYS
Supramax
Better rates in Atlantic, but not too busy market just yet.
Black Sea catched improving rates for grain cargoes, where supras to Eg ...
Friday, 02 March 18
U.S. WEEKLY COAL PRODUCTION DOWN 2.7 PER CENT W/E 24 FEB, EIA DATA SHOWS
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 15.2 million short tons ...
Wednesday, 28 February 18
INDIA: TEPID COAL TRAFFIC TO HIT VOLUME GROWTH AT PORTS TILL 2022 - PTI
Cargo growth at the country’s major ports is all set to moderate to 3-5 per cent per annum over the next five years due to the “sedate ...
Wednesday, 28 February 18
MARKET INSIGHT - LINOS KOGEVINAS
US Shale production continues to grow rapidly, hitting new records and with projections being revised upwardly at every turn. According to the Inte ...
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- Ambuja Cements Ltd - India
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- Krishnapatnam Port Company Ltd. - India
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- Power Finance Corporation Ltd., India
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- Economic Council, Georgia
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- Toyota Tsusho Corporation, Japan
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- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- VISA Power Limited - India
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- Posco Energy - South Korea
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- Indogreen Group - Indonesia
- White Energy Company Limited
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- PTC India Limited - India
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- Gujarat Mineral Development Corp Ltd - India
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- IEA Clean Coal Centre - UK
- Pendopo Energi Batubara - Indonesia
- MS Steel International - UAE
- Wilmar Investment Holdings
- Bharathi Cement Corporation - India
- PowerSource Philippines DevCo
- The University of Queensland
- Mercuria Energy - Indonesia
- Australian Coal Association
- Africa Commodities Group - South Africa
- Chettinad Cement Corporation Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Straits Asia Resources Limited - Singapore
- Meralco Power Generation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- Vizag Seaport Private Limited - India
- Global Coal Blending Company Limited - Australia
- Salva Resources Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Xindia Steels Limited - India
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- Electricity Authority, New Zealand
- Mintek Dendrill Indonesia
- Dalmia Cement Bharat India
- SMC Global Power, Philippines
- Meenaskhi Energy Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Central Java Power - Indonesia
- Semirara Mining Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Port Waratah Coal Services - Australia
- Simpson Spence & Young - Indonesia
- ASAPP Information Group - India
- Malabar Cements Ltd - India
- Global Business Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Coal and Oil Company - UAE
- Lanco Infratech Ltd - India
- Kepco SPC Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- SMG Consultants - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Carbofer General Trading SA - India
- Kohat Cement Company Ltd. - Pakistan
- Karaikal Port Pvt Ltd - India
- Chamber of Mines of South Africa
- PetroVietnam Power Coal Import and Supply Company
- Jorong Barutama Greston.PT - Indonesia
- Medco Energi Mining Internasional
- Price Waterhouse Coopers - Russia
- Interocean Group of Companies - India
- Kumho Petrochemical, South Korea
- Grasim Industreis Ltd - India
- Georgia Ports Authority, United States
- Energy Link Ltd, New Zealand
- Manunggal Multi Energi - Indonesia
- Petron Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- London Commodity Brokers - England
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- Bayan Resources Tbk. - Indonesia
- Eastern Coal Council - USA
- Ministry of Transport, Egypt
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- Kobexindo Tractors - Indoneisa
- Bhoruka Overseas - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kaltim Prima Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Ministry of Mines - Canada
- Commonwealth Bank - Australia
- India Bulls Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
- Jaiprakash Power Ventures ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tata Chemicals Ltd - India
- Antam Resourcindo - Indonesia
- Altura Mining Limited, Indonesia
- Sindya Power Generating Company Private Ltd
- Sree Jayajothi Cements Limited - India
- Australian Commodity Traders Exchange
- Wood Mackenzie - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement - Thailand
- The Treasury - Australian Government
- The State Trading Corporation of India Ltd
- Larsen & Toubro Limited - India
- Parry Sugars Refinery, India
- GMR Energy Limited - India
- Eastern Energy - Thailand
- Indian Energy Exchange, India
- Metalloyd Limited - United Kingdom
- Bhatia International Limited - India
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Barasentosa Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Coalindo Energy - Indonesia
- Edison Trading Spa - Italy
- Pipit Mutiara Jaya. PT, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Goldman Sachs - Singapore
- Cement Manufacturers Association - India
- Jindal Steel & Power Ltd - India
- Orica Australia Pty. Ltd.
- South Luzon Thermal Energy Corporation
- Kalimantan Lumbung Energi - Indonesia
- Kartika Selabumi Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- CNBM International Corporation - China
- Coastal Gujarat Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Heidelberg Cement - Germany
- Standard Chartered Bank - UAE
- OPG Power Generation Pvt Ltd - India
- Latin American Coal - Colombia
- Ministry of Finance - Indonesia
- New Zealand Coal & Carbon
- Gujarat Sidhee Cement - India
- Rio Tinto Coal - Australia
- Deloitte Consulting - India
- Attock Cement Pakistan Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Mjunction Services Limited - India
- Bhushan Steel Limited - India
- International Coal Ventures Pvt Ltd - India
- Makarim & Taira - Indonesia
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- Planning Commission, India
- Singapore Mercantile Exchange
- Sical Logistics Limited - India
- Central Electricity Authority - India
- McConnell Dowell - Australia
- Indian Oil Corporation Limited
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- European Bulk Services B.V. - Netherlands
- Electricity Generating Authority of Thailand
- Star Paper Mills Limited - India
- Renaissance Capital - South Africa
- Bulk Trading Sa - Switzerland
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercator Lines Limited - India
- Maheswari Brothers Coal Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Romanian Commodities Exchange
- Uttam Galva Steels Limited - India
- Agrawal Coal Company - India
- IHS Mccloskey Coal Group - USA
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