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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, 23 February 24
STRONG OUTLOOK FOR THE TANKER MARKET IN 2024 AND BEYOND - DNV
Several factors have aligned over the past two years to create a robust and profitable market for tanker owners, which is expected to drive newbuil ...
Friday, 23 February 24
AUSTRALIAN COAL FLOWS TO ASIA HOVER ABOVE LAST YEAR’S VOLUME TONNES - SIGNAL GROUP
In the final days of February, the dry bulk freight market appeared to maintain a relatively stable momentum, particularly evident in the large ves ...
Friday, 23 February 24
RUSSIAN COAL SHIPMENTS FALL 14% AS SANCTIONS BITE - BIMCO
During the first seven weeks of 2024, Russian coal shipments have fallen 14% y/y. Volumes have gradually declined since October 2023 when logistica ...
Thursday, 22 February 24
BIMCO PUBLISHES SHIP FINANCING FORMS TO ENSURE UNINTERRUPTED USE OF SHIPS
BIMCO has published two standard Quiet Enjoyment Letters (QELs), the first standard form QELs available to the industry, to offer a tool that can e ...
Monday, 19 February 24
METALS INVESTMENT: THE DARKEST HOUR IS JUST BEFORE THE DAWN - WOOD MACKENZIE
Things often seem at their worst just before they get better. In terms of meeting our net zero 2050 scenario, we’ve reached a watershed momen ...
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- Billiton Holdings Pty Ltd - Australia
- Petron Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Videocon Industries ltd - India
- Sical Logistics Limited - India
- Singapore Mercantile Exchange
- Star Paper Mills Limited - India
- Pendopo Energi Batubara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Australian Coal Association
- ICICI Bank Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- Malabar Cements Ltd - India
- Madhucon Powers Ltd - India
- Iligan Light & Power Inc, Philippines
- Makarim & Taira - Indonesia
- Heidelberg Cement - Germany
- Bhushan Steel Limited - India
- SMG Consultants - Indonesia
- Coastal Gujarat Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Carbofer General Trading SA - India
- Vedanta Resources Plc - India
- AsiaOL BioFuels Corp., Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Manunggal Multi Energi - Indonesia
- Indogreen Group - Indonesia
- IHS Mccloskey Coal Group - USA
- Borneo Indobara - Indonesia
- Ind-Barath Power Infra Limited - India
- Eastern Energy - Thailand
- Barasentosa Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- New Zealand Coal & Carbon
- Jorong Barutama Greston.PT - Indonesia
- Energy Development Corp, Philippines
- Attock Cement Pakistan Limited
- Global Business Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Electricity Generating Authority of Thailand
- Indian Oil Corporation Limited
- Coalindo Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Bukit Asam (Persero) Tbk - Indonesia
- Economic Council, Georgia
- Coal and Oil Company - UAE
- Karaikal Port Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Oldendorff Carriers - Singapore
- Cement Manufacturers Association - India
- Interocean Group of Companies - India
- Trasteel International SA, Italy
- SMC Global Power, Philippines
- OPG Power Generation Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Bhatia International Limited - India
- Neyveli Lignite Corporation Ltd, - India
- GN Power Mariveles Coal Plant, Philippines
- Lanco Infratech Ltd - India
- Salva Resources Pvt Ltd - India
- Deloitte Consulting - India
- Kartika Selabumi Mining - Indonesia
- PowerSource Philippines DevCo
- TNB Fuel Sdn Bhd - Malaysia
- Georgia Ports Authority, United States
- ASAPP Information Group - India
- MS Steel International - UAE
- Jaiprakash Power Ventures ltd
- Thiess Contractors Indonesia
- Sree Jayajothi Cements Limited - India
- India Bulls Power Limited - India
- PNOC Exploration Corporation - Philippines
- Merrill Lynch Commodities Europe
- Kumho Petrochemical, South Korea
- Straits Asia Resources Limited - Singapore
- PTC India Limited - India
- The Treasury - Australian Government
- The State Trading Corporation of India Ltd
- Siam City Cement PLC, Thailand
- Indian Energy Exchange, India
- Samtan Co., Ltd - South Korea
- Planning Commission, India
- Pipit Mutiara Jaya. PT, Indonesia
- The University of Queensland
- Meenaskhi Energy Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parry Sugars Refinery, India
- Latin American Coal - Colombia
- Tamil Nadu electricity Board
- Siam City Cement - Thailand
- Gujarat Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Leighton Contractors Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Rio Tinto Coal - Australia
- Timah Investasi Mineral - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Ministry of Finance - Indonesia
- Mjunction Services Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Marubeni Corporation - India
- Romanian Commodities Exchange
- Antam Resourcindo - Indonesia
- Bukit Makmur.PT - Indonesia
- Indonesian Coal Mining Association
- Goldman Sachs - Singapore
- Miang Besar Coal Terminal - Indonesia
- Medco Energi Mining Internasional
- Metalloyd Limited - United Kingdom
- Larsen & Toubro Limited - India
- Kapuas Tunggal Persada - Indonesia
- Edison Trading Spa - Italy
- Rashtriya Ispat Nigam Limited - India
- TeaM Sual Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Vijayanagar Sugar Pvt Ltd - India
- Dalmia Cement Bharat India
- Independent Power Producers Association of India
- Standard Chartered Bank - UAE
- Sarangani Energy Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Orica Australia Pty. Ltd.
- Ambuja Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- Bharathi Cement Corporation - India
- Port Waratah Coal Services - Australia
- Globalindo Alam Lestari - Indonesia
- Xindia Steels Limited - India
- Formosa Plastics Group - Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining Corp, Philippines
- Savvy Resources Ltd - HongKong
- Thai Mozambique Logistica
- Australian Commodity Traders Exchange
- Tata Chemicals Ltd - India
- Aboitiz Power Corporation - Philippines
- Agrawal Coal Company - India
- IEA Clean Coal Centre - UK
- Banpu Public Company Limited - Thailand
- Chamber of Mines of South Africa
- Parliament of New Zealand
- White Energy Company Limited
- Binh Thuan Hamico - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Grasim Industreis Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indo Tambangraya Megah - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- GVK Power & Infra Limited - India
- South Luzon Thermal Energy Corporation
- Wood Mackenzie - Singapore
- Kohat Cement Company Ltd. - Pakistan
- CIMB Investment Bank - Malaysia
- Anglo American - United Kingdom
- Eastern Coal Council - USA
- Petrochimia International Co. Ltd.- Taiwan
- Asmin Koalindo Tuhup - Indonesia
- VISA Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Vizag Seaport Private Limited - India
- GMR Energy Limited - India
- Jindal Steel & Power Ltd - India
- Wilmar Investment Holdings
- Electricity Authority, New Zealand
- Sakthi Sugars Limited - India
- London Commodity Brokers - England
- Maheswari Brothers Coal Limited - India
- Global Coal Blending Company Limited - Australia
- Baramulti Group, Indonesia
- Mercuria Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Energy Link Ltd, New Zealand
- CNBM International Corporation - China
- LBH Netherlands Bv - Netherlands
- Intertek Mineral Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Ministry of Mines - Canada
- Simpson Spence & Young - Indonesia
- Sindya Power Generating Company Private Ltd
- Directorate General of MIneral and Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Uttam Galva Steels Limited - India
- Commonwealth Bank - Australia
- Mercator Lines Limited - India
- Ceylon Electricity Board - Sri Lanka
- Sinarmas Energy and Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Posco Energy - South Korea
- Mintek Dendrill Indonesia
- Africa Commodities Group - South Africa
- Bangladesh Power Developement Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- McConnell Dowell - Australia
- Orica Mining Services - Indonesia
- Indika Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Central Electricity Authority - India
- Renaissance Capital - South Africa
- Semirara Mining and Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Aditya Birla Group - India
- Minerals Council of Australia
- Sojitz Corporation - Japan
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
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