Oil extended losses to multi-month lows on Monday (3 August) on worries of oversupply as OPEC pumped at record levels in July, while weak China data stoked concerns about slower growth at the world's second largest oil consumer. Oil output by the Organization of the Petroleum Exporting Countries (OPEC) reached the highest monthly level in recent history in July, a Reuters survey showed, with Saudi Arabia and other key members showing no sign of wavering in their focus on defending market share instead of prices. The lack of a plan by OPEC to make room for the return of more Iranian oil further fuelled supply worries. Iran expects to raise output by 500,000 barrels per day (bpd) as soon as sanctions are lifted and by a million bpd within months, its Oil Minister Bijan Zanganeh has said. "The market seems to again focus on the supply situation ... one of the difficulties is that Iran may be coming back and there is no obvious sign that OPEC will make room for them," Ric Spooner, chief market analyst at CMC Markets in Sydney said. Brent fell 50 cents to $51.71 a barrel by 0643 GMT after touching an intraday low of $51.50, the lowest since Feb. 2. It is on its longest weekly losing streak since late 2014. U.S. crude fell 39 cents to $46.73 a barrel after hitting the lowest in four months at $46.35. Front-month prices lost 20.8 percent in July, the biggest monthly drop since October 2008. Technical charts showed that Brent could fall further towards $50 in the near term while West Texas Intermediate (WTI) could head to lows of around $42.03 if it breaks a support level at $46.40, Barclays analyst Lynnden Branigan said in a note. Hedge funds and other speculators have slashed their bullish exposure to WTI to the lowest in nearly five years, trade data showed on Friday, as local drillers continue to add rigs and pump at full throttle despite a global oil glut. "The recent recovery in the oil rig count supports our expectation that U.S. producers can and will ramp up activity with WTI prices near $60/bbl, given improved returns with costs down 30 percent," Goldman Sachs analysts said in a weekly rig count report. "The current rig count implies that U.S. production will sequentially decline in 3Q15 although continue to grow in 2016." Growth at China's big manufacturing companies unexpectedly stalled in July as demand at home and abroad weakened, an official survey showed on Saturday, adding to worries from a recent slump in Chinese stock markets.(Reuters)
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Petronet LNG aims to lease out about two-thirds of the capacity at its Dahej import terminal in Gujarat over the next four years to boost revenue and prevent the facility falling into disuse. The company, which handles large volumes of liquefied natural gas (LNG) imported from Qatar for Indian companies, wants to lease space to other firms as domestic demand for its costly Qatari cargoes recedes. In April-June, Petronet operated its 10 million tonnes per annum (mtpa) Dahej terminal at 98.4 percent capacity despite lower demand for its oil-indexed, costly LNG sourced under a 25-year deal with Qatar's RasGas. Spot prices of LNG have collapsed by more than 60 percent over the past year, whereas oil-indexed LNG prices have remained more steady, reducing appetite for the expensive supply. Currently it buys 7.5 mtpa of LNG from RasGas under the long-term deal, and has leased 1.25 mtpa of capacity to state-run GSPC Group in Gujarat. It has also signed deals to lease out 6 mtpa of capacity to state-run firms by 2017, when the capacity of the plant will be raised to 15 mtpa. Petronet LNG is in talks with various companies to lease out 2.5 mtpa of capacity to be added in the next phase by 2019, its technical director Rajender Singh said, which if worked out will be about 63 percent of the expanded capacity. "Our risk is reduced through leasing ... we will get revenue through regasification charges and that's our strength," Singh said. Due to cheaper prices of Asian spot LNG, Petronet has been forced to import 68 percent less fuel than it is supposed to under the long-term deal with Qatar. Pricing of LNG under the long-term deal is linked to the 12-month rolling average of the Japan Crude Cocktail (JCC) price. While this formula reduces volatility, it does not reflect price falls as much as spot pricing. Petronet's head of finance, R.K. Garg, said the trend of lower offtake of gas under the long-term deal was continuing. Reuters on Thursday reported that Petronet has been forced to cut purchases under the long-term Qatar deal by 30 percent due to low domestic demand. Higher imports of spot cargoes helped Petronet improve operations at its Dahej plant, Garg said. (Reuters)
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Oil prices fell to their lowest in nearly six months on Tuesday (28 July), as a rout in the Chinese stock market cast further doubt over the outlook for crude demand in the world's top commodities consumer. China's already-volatile benchmark stock index, with a combined market capitalisation of $4.6 trillion, has lost 10% in the last two days of trade. Most household debt is linked to real estate rather than the stock market, but with Chinese economic growth struggling to stick at 7%, analysts say demand for crude may not be enough to help mop up a global supply glut. "Typically, equity markets do have a high correlation to quarterly GDP growth," Deutsche Bank strategist Michael Lewis said. "Naturally, there is some risk that this could spill into the real economy. The more these things go down on a day-by-day basis, that is starting to affect the potential of Chinese demand growth being weaker." Brent was down 72 cents at $52.75 a barrel by 1054 GMT, having hit a session low of $52.28, its lowest since early February, bringing the losses for July to nearly 18%. Brent crude is on track for its longest stretch of daily losses since March, when the price hovered just dollars away from six-year lows. US crude was last down 33 cents at $47.06 a barrel after ending the previous session down 75 cents. Adding to the uncertainty over the health of the Chinese economy is concern about rising global oil production in a market already oversupplied by some 2 million barrels a day. Investors are watching for weekly data on US inventory levels to gauge the strength of demand. US commercial crude oil stocks likely slipped last week after crossing the five-year seasonal average build in the previous week, a preliminary Reuters poll of analysts showed ahead of industry and official weekly reports. Crude stocks fell about 300,000 barrels to 463.6 million barrels in the week ended July 24, analysts estimated. "We're not seeing the level of demand in the US one usually expects related to the summer drive-time," said Jonathan Barratt, chief investment officer at Sydney's Ayers Alliance. "The world is awash with oil."(Reuters)
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Oil prices fell towards four-month lows on Tuesday (28 July), dropping for a fifth straight session on persistent worries about a global supply glut, while stock market sell-offs on both sides of the Pacific also rattled investor sentiment.Asian stocks fell to three-week lows, with a deepening rout in Chinese stocks heightening fears about the financial stability of the world's second biggest economy and top energy consumer.Uncertainty over the health of the Chinese economy, reflected in the sell-off in the stocks, lacklustre US oil demand and increasing oil supplies all added to investors' negativity about oil prices, said Jonathan Barratt, chief investment officer at Sydney's Ayers Alliance"Technical levels continue to break. It's a trend which says investors are selling," Barratt said. "It's all about sentiment - it's a one-way traffic."Brent dropped 36 cents to $53.11 as of 0430 GMT after 2 per cent drop in the previous session. It dipped to $52.89 earlier, hovering close to a four-month low of $52.83 reached on Monday.US crude dropped 20 cents to $47.19 a barrel after ending the previous session down 75 cents. It fell below $47 post-settlement, the lowest since March 24.The bearish sentiment will continue, testing technical support levels, although oil prices are expected to end 2015 higher than at current levels, according to a note from Phillip Futures on Tuesday."For today, we believe the next support for WTI and Brent to be at $46.73 and $52.40. Provided the bearish trend continues, lower supports of $45.90 and $50 could be tested," it added.Investors are now eyeing weekly data on US inventory levels for further trading cues.US commercial crude oil stocks likely slipped last week after crossing the five-year seasonal average build in the previous week, a preliminary Reuters poll of analysts showed ahead of industry and official weekly reports.Crude stocks fell about 300,000 barrels to 463.6 million barrels in the week ended July 24, analysts estimated."We're not seeing the level of demand in the US one usually expects related to the summer drive-time," Barratt said."The world is awash with oil," he added.(Reuters)
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Oil prices fell on Monday (27 July) after closing the previous session at their lowest levels since March on renewed oversupply concerns from the United States and Iraq, although a weaker dollar helped to limit deeper losses.Investors are looking to the US Federal Reserve for direction this week. The central bank starts a two-day policy meeting on Tuesday that could result in a September interest rate hike that would strengthen the greenback."The markets are looking for price guidance from Janet & Co," said Ben Le Brun, market analyst at Sydney's OptionsXpress, referring to Fed Chair Janet Yellen and the bank."There is scope for the dollar bulls to be disappointed this week (which) might be a driver for oil prices and the commodities complex overall," Le Brun said.A weaker dollar makes dollar-denominated commodities, including oil, cheaper for consumers using other currencies.Brent crude for September fell 6 cents to $54.56 a barrel as of 0340 GMT after dropping 65 cents in the previous session to $54.62, its lowest close since March 19.U.S. crude for September was down 12 cents at $48.02, after briefly dropping below $48 a barrel. U.S. oil fell 31 cents in the previous session to $48.14, its lowest settlement since March 31.Sparking new worries about a global glut, US oil producers added 21 drilling rigs last week, the biggest rise since April 2014, according to Baker Hughes.The increase in drilling activity came despite a 21 per cent collapse in US crude prices from about $61 a barrel in mid-June. A 20 per cent downturn is considered by many traders to constitute a bear market.In Iraq, exports from its southern oilfields are on course for a new monthly record, having topped 3 million barrels per day so far this month, according to loading data and an industry source.The expectation of continued abundant oil supplies, including an output increase from Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries, led the National Australia Bank on Monday to revise its oil price forecasts in a monthly report."We now expect oil prices to stay below $70 a barrel for the rest of 2015 and 2016," the bank said.Speculators cut long bets on US crude futures and options to the lowest level in five years last week, the US Commodity Futures Trading Commission said on Friday.(Reuters)
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State-owned Oil and Natural Gas Corp (ONGC) plans to invest over $8.8 billion in bringing to production its much-touted KG-basin oil and gas discoveries by 2018-19. ONGC has divided 12 oil and gas finds in the block KG-DWN-98/2 or KG-D5 and gas discovery in an adjacent G-4 block the Bay of Bengal into three clusters to quickly bring them to production, a senior company official said. The 7,294.6 sq km deepsea KG-D5 block has been broadly categorised into Northern Discovery Area (NDA - 3,800.6 sq km) and Southern Discovery Area (SDA - 3,494 sq km). The company plans to develop the 11 oil and gas finds in the NDA together with one gas find in G-4 block at an investment of USD 8.843 billion, he said. "The investment will be for drilling 45 development wells, an array of sub-sea pipelines carrying gas to a fixed platform for processing and a pipeline to carry gas form it to an onshore terminal. Oil will be transported to a floating production system (FPSO) that will transfer it to ships for taking to refineries," he said. ONGC plans to develop the discoveries in the block in three clusters -- 14.5 million standard cubic meters per day of gas for 15 years from Cluster-1 comprising of D&E finds of NDA in KG-D5 block and G-4 find in the a neighbouring area. Cluster-2A mainly comprises of oil finds of A2, P1, M3, M1 and G-2-2 in NDA which can produce 75,000 barrels per day (3.75 million tonnes per annum). Cluster 2B, which is made up of four gas finds -- R1, U3, U1, and A1 in NDA -- envisages a peak output of 14 mmscmd of gas, with cumulative production of 32.5 bcm of gas in 14 years. "We plan to get first gas by mid-2018 and first oil by mid-2019," he said. Cluster-3 is the UD-1 gas discovery in SDA. "UD-1 lies in water depth of 2400-3200 meters and there is no technology to produce from such depths. And so Cluster-3 is presently not being pursued for development," he said. Gas produced from Cluster-1 is proposed to be taken to a Fixed Platform in shallow water depths through an 18-inch, 16.1 km pipeline and treated and subsequently evacuated to Odalarevu onshore terminal in Andhra Pradesh through 20-inch, 35.5 km pipeline for sales. Oil produced from Cluster-2 is proposed to be taken on to an FPSO (Floating Production Storage and Offloading) anchored in high-sea through an 18-inch, 21.5 km pipeline. While oil will then be transfered to tankers for transportation to refineries, gas produced alongside will be evacuated on to Fixed platform through an 18-inch, 21.4 km pipeline. The official said there is an existing terminal at Odalarevu, for processing of hydrocarbons received from offshore fields: G-1, Vasishta and S-I. (Agencies)
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Ruling out any "emergency or urgency" in getting back $6.5 billion oil import dues from India, Iran has proposed that a part of this corpus can be invested in Indian projects there - assuaging concerns that an immediate payment outgo might hit India's forex reserves. Hopeful that a "settlement" can be reached on how to clear these dues, Iran has also proposed delegation-level visits and discussions to iron out the issues in this regard. The assurance by Iranian Ambassador to India, Gholamreza Ansari, assumes significance as there were concerns that India might have to make immediate payments to clear these dues after lifting of the Western sanctions on Iran. The dues have been pending largely because of curbs on the banking and payment channels connecting Iran. As per the estimates, more than half of the crude oil bill has remained uncleared in the past two years and has grown to more than $6.5 billion (over Rs 41,000 crore). "We are neither in emergency or urgent situation. It depends on discussions between the two sides. We should exchange delegations between the two countries and discuss arrangements which they want to do business with each other," Ansari told PTI in an interview in New Delhi. "Anyway, it will take a long time between Iran and India (to settle the dues) because we are good partners and may be part of this money can go to different projects, different purposes," he said. Delegation To Visit IranIndia's Finance Secretary Rajiv Mehrishi will lead a delegation of officials from Reserve Bank of India, state-run UCO Bank and oil companies from July 25-26, to Iran to discuss how to pay its oil import dues, three sources with direct knowledge of the matter said, according to Reuters. The Iranian ambassador did not give the exact figure of the payments to be made by India and only said it was a "substantial" amount. "In future...we will have some sort of settlement on what we want to do with the dues... We should find mechanism to settle it. How we want to use it, sell it or transfer it. It can be discussed between the two sides," the envoy further said, indicating that there were many investment opportunities in Iran and part of the dues could be used there. India has maintained a trade relation with Iran despite the sanctions, especially in terms of crude oil imports. As per the industry estimates, India has been Iran's second biggest oil customer after China. Ansari's remarks have come amid concerns in India that after an agreement between Iran and western countries on Tehran's contentious nuclear program resulting in lifting of sanctions, it would be required to make an immediate payment in US dollars, thereby hitting the country's forex reserve severely. Till about 6-7 years ago, Iran accounted for 15-17 per cent of the total Indian oil imports and was the second biggest supplier to India. However, Iran's share in the Indian oil imports has now more than halved from that level and it was seventh largest supplier in 2014. Still, India is estimated to have imported 42 per cent more Iranian oil in 2014 after sanctions began to ease. The imports had dipped sharply in 2013 as a clampdown on insurers hit the shipments in a big way. Oil ImportersIranian oil has been imported by private as well as public sector refiners in India. Essar Oil owes $3.34 billion, Mangalore Refinery and Petrochemicals Ltd $2.49 billion, followed by Indian Oil Corp, which has to pay $581 million to Iran, said one of the sources in the Reuters report. HPCL-Mittal Energy Ltd (HMEL) owes $97 million and Hindustan Petroleum Corp has to pay $29 million, this source said. "About 170 billion rupees ($2.67 billion) are lying in Iran's account with UCO Bank," said a second source. This source also said ONGC Videsh, the overseas investment arm of the country's biggest explorer Oil and Natural Gas Corp also planned to visit Tehran in the coming days to discuss development rights of the giant Farzad B gas field. (Agencies)
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Britain's Cairn Energy Plc is set to vote against Vedanta Ltd's $2.3 billion buyout offer for Cairn India's minority shareholders, the Financial Times said on Wednesday, citing people familiar with the situation. Cairn Energy's objections were over "fundamental disagreements over valuations", and its preference for "holding an investment in an energy company rather than a distributed resources group," the newspaper said, citing one person with direct knowledge of the matter. News of Cairn Energy's objections comes a day after Cairn India chief Mayank Ashar said the merger was on track. Spokespeople for Vedanta and Cairn India could not be immediately reached for comment outside business hours. A spokesman for Cairn Energy said the company had no comment on the report. Ex-parent Cairn Energy is the single largest minority shareholder in Cairn India in which Vedanta already has a 59.88 percent stake. State-owned insurer Life Insurance Corp (LIC), Cairn India's second-largest minority shareholder, and which together with Cairn Energy controls about 19 percent of the Indian company, had earlier expressed reservations about the deal. The deal is being seen by many as a test for India's new shareholder protection law, which requires an approval of more than half of the minority shareholders to go through. (Reuters)
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The Bombay Stock Exchange (BSE) has approved the planned delisting of shares in Essar Oil Ltd, two sources familiar with the matter told Reuters. The delisting plan had already been approved by National Stock Exchange. Essar Oil, a unit of India's diversified Essar Group, was given the BSE green light on Wednesday, the sources said. Spokespeople for the BSE and the NSE could not be immediately reached for comment. An Essar spokesman declined comment. Russian oil giant Rosneft is in a talks to buy a stake of up to 49 percent in Essar Oil, which operates a 400,000 barrels per day (bpd) Vadinar refinery in Gujarat.
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Petrol and diesel prices were on Wednesday (15 July) cut by Rs 2 per litre, excluding local levies, in the second reduction of rates this month by oil companies, but the petrol would actually become costlier in the national capital due to an increase in VAT rate here. The decrease in diesel prices would also be less in Delhi due to a hike in Value Added Tax (VAT) by Arvind Kejriwal-led Aam Aadmi Party government. The new rates announced by the oil marketing companies will be effective from midnight tonight. While, the reduction in petrol and diesel prices was reflective of local trends, the consumers in Delhi will not be able to get the benefit as the Arvind Kejriwal government raised VAT on the two fuels robbing city customers of the reduction. While the rates will reduce by a bigger number all over the country, petrol price in Delhi will go up by 28 paise a litre after considering local government's decision to hike VAT or sales tax on the fuel from 20 to 25 per cent. Similarly, diesel rates will fall across the country. In case of Delhi, where the VAT on the fuel has been raised from 12.5 per cent to 16.6 per cent, there will be smaller reduction of 50 paise per litre. Petrol in Delhi will cost Rs 66.90 per litre from tomorrow instead of Rs 66.62 at present. A litre of diesel will cost Rs 49.72 per litre as against Rs 50.22 earlier, Indian Oil Corp (IOC), the nation's largest oil company, said. "Prices of petrol and diesel were last revised w.e.f. 1st July'15. Since last price change, there has been a decrease in international prices of both Petrol & Diesel. INR-USD exchange rate has also appreciated during this period. Combined impacts of both these factors warrant the said downward revisions," it said. Price of petrol was last cut on July 1 by 31 paise per litre and diesel by 71 paise a litre. "Since last price change, there has been a decrease in international prices of both petrol and diesel. Indian rupee-US dollar exchange rate has appreciated during this period. Combined impact of both these factors warrants a downward revision in prices, the impact of which is being passed on to the consumers with this price decrease," IOC said. The July 1 reduction in petrol prices came on back of three successive increases since May. In case of diesel, the July 1 cut was the second reduction in rates sine June. Prior to that auto fuel rates were last revised on June 16 when prices of petrol were hiked by 64 paise a litre but diesel rates were cut by Rs 1.35 per litre. State-owned fuel retailers IOC, Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL) revise petrol and diesel prices on 1st and 16th of every month based on average imported cost and rupee-dollar exchange rate in the previous fortnight. "The movement of prices in international oil market and Rupee-USD exchange rate shall continue to be monitored closely and developing trends of the market will be reflected in future price changes," IOC statement added.(Agencies)
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