U.S. crude fell for a third session in a row on Friday to the lowest in over two months as a relentless climb in oil stockpiles helped trigger a 10 percent drop in prices since the start of November, with traders taking on bets on further falls. Benchmark U.S. crude futures were at $41.52 a barrel at 0417 GMT, down 23 cents from Thursday, when prices tumbled almost 3 percent on the back of rising U.S. stocks. The contract was at the lowest since Aug. 27. Internationally traded Brent crude futures were at $44.10 a barrel, up four cents on their last settlement, but close to August lows. "U.S. crude inventories breaking to a new high and production inching upwards should have been the reason for the market shakedown," Singapore-based Phillip Futures said, referring to a 4.2 million barrel crude inventory rise by last week against a market expectation for a 1.3 million barrel gain. ANZ bank said a big price rebound this year was unlikely: "A year-end recovery in commodity prices remains unlikely with a stronger US$ and EM (emerging market) growth concerns." There are also signs that traders are preparing for more price falls this year and into 2016, with the number of options taken to sell crude futures if prices fall to $40 or even $25 per barrel between December 2015 and June 2016 soaring over the past month. Oil markets have been dogged by oversupply, which analysts estimate to be between 0.7 and 2.5 million barrels of oil being produced a day above demand, and which has resulted in prices falling by almost two-thirds since June 2014. The glut is a result of high production by most major producers, including countries making up the Middle East-led Organization of the Petroleum Exporting Countries (OPEC), but also Russia and North America. OPEC said it expects an oil surplus to extend into 2016, albeit at a lower rate than this year. The group said it pumped 31.38 million barrels per day (bpd) last month, down 256,000 bpd from September. That is the first decline since March, according to OPEC figures. On the demand side, an economic slowdown in Asia, led by the region's two biggest economies, China and Japan, has led to concerns about slowing demand, although consumption has so far held up. (Reuters)
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Hindustan Petroleum Corporation reported a Rs 320 crore net loss for the three months to September against a net profit of Rs 850.31 crore a year ago, on high inventory losses following low crude oil prices, but a marginal rise in gross refining margins to $2.74 a barrel cushioned deeper cuts. The state-run company has booked an inventory loss of Rs 1,400 crore during the quarter. The oil refiner and marketer had earned $2.12 on turning every barrel of crude oil into products in the year ago period, which had helped it report more than double its net income to Rs 850.31 crore. "Declining crude and product prices severely impacted our bottomline on account of inventory losses worth Rs 1,400 crore during the quarter leading to a net loss of Rs 320 crore," HPCL chairperson and managing director Nishi Vasudeva told reporters in Mumbai on Monday. During the reporting period its net sales declined to Rs 42,003.57 crore from Rs 51,803.26 crore, she said, adding expenses declined to Rs 42,672.93 crore from Rs 49,491 crore. The finance cost also increased to Rs 165.03 crore from Rs 122.74 crore, as its long-term borrowings rose to Rs 15,405.53 crore from Rs 14,855.83 crore a year ago, while tax expenses came down massively to Rs 149.85 crore from Rs 832.38 crore during the quarter. The company's total debt on the book stood at Rs 22,000 crore at the end of the quarter. The state-run company's under-recovery stood at Rs 552 crore during the quarter but it got back Rs 550 crore of that from the government by way of subsidy reimbursements. Vasudeva said the board has approved the Rs 4,200 crore expansion plan of the Mumbai Refinery, which will increase its refining capacity to 9.5 million tonne from 6.5 million now, which will help it become compliant by 2020 to offer BS IV/V diesel and petrol. The company has invested Rs 280 crore capital into the national crude reserves cavern in Vishakapatnam, which is under operations now. This investment has taken the company's crude storage capacity to 330 tmt. The chairperson also said the company will commission the 443-km Rewari-Kanpur oil pipeline with a capacity of 7.98 mt this fiscal. The company is investing Rs 1,400 crore into the project. The company will also commission the LPG pipeline between Uran near Mumbai to Chakan near Pune as well as the Mangalore-Hassan-Mysore LPG pipeline. She said to date, out of its 48 million LPG customers 1.28 million have given up their subsidies, while the industry as a whole has seen 4.52 million customers. The company imports 30 per cent of LPG demand. (PTI)
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Castrol India posted on Friday (06 November) an increase in its profit after tax of 23.1 per cent at Rs 206.5 crore for July-September 2015 while profit after Tax was Rs 143.2 crore during the same period in the previous year.For the nine month period January – September 2015, Profit after Tax was up by 38.5 per cent to Rs 474.4 crore as against Rs 342.5 crore during the same period in the previous year.Omer Dormen, Managing Director, Castrol India Limited, said, “After sharp decline in the first two quarters due to sluggish manufacturing activity and increased competition, the Industrial business is seeing some improvement as a result of new customer wins especially in the wind and steel segments. On a like for like basis, our Sales Volume during third quarter remained flat versus same period last year. Year-to-date, the Industrial business delivered double digit Gross Margin and Operating profit growth over the same period last year, driven largely through increased focus on product mix.”The financial results for the third quarter demonstrate a solid performance, building on operational momentum and continued premiumization of our portfolio, aided by a more favorable cost of goods environment, Dormen added.(BW Online Bureau)
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Indian Oil Corp wants to buy a stake in Rosneft's Vankor field in Russia, its chairman said on Tuesday, as the country's top refiner aims to source at least 160,000 barrels per day (bpd) oil through its own assets by 2020. India imports about 80 percent of its crude needs and has mandated its oil firms to acquire oil and gas assets overseas in a bid to cut an oil import bill running in billions of dollars. ONGC Videsh Ltd (OVL) in September bought a 15 percent stake in Vankor in Siberia to secure access to about 66,000 bpd of oil production. "OVL is already there what we have said is that we could look at it together in their (OVL's) terms," B. Ashok told a news conference, adding that the talks are at a preliminary stage. He said IOC has not decided on the size of any stake. Ashok said his firm aims to spend up to 1.75 trillion Indian rupees ($26.63 billion) in the next five to seven years to build up its refining, pipeline, petrochemicals and retail business. IOC in April commissioned its 300,000 bpd coastal refinery at Paradip in eastern Odisha state. The plant is expected to operate at a full rate in the fiscal year to March 2017, said Sanjiv Kumar, IOC's head of refineries. The refinery would soon begin producing gasoline, and that would help cut imports of the fuel, Kumar said. IOC estimates India's fuel demand to rise by 4-5 percent in this fiscal year mainly due to robust consumption of gasoline and gasoil. The Indian refiner has a term deal to buy 30,000 bpd Iranian oil and it could step up purchases if "economics work out" and sanctions against Tehran are lifted, Ashok said. IOC frequently taps spot markets for low sulphur oil, mainly from Nigeria, to feed its refineries that accounts for about a third of the country's 4.6 bpd capacity. The Indian refiners received only half of the contracted 60,000 bpd oil with Nigerian state-firm NNPC this year, and had to tap the spot market for 130,000 bpd West African oil. IOC recently submitted a bid to buy 100,000 bpd of sweet oil in the latest annual tender issued by Nigerian state oil firm NNPC, said A.K. Sharma, head of finance at IOC. (Reuters)
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Internal OPEC squabbles are on the rise as members argue about the need to support a fair oil price and boost revenues just as they feel more pain from low crude prices, an internal OPEC report seen by Reuters this week showed. A draft report of OPEC's long-term strategy (LTS) carries annotations by Iran, Algeria and Iraq, and suggestions from Iran and Algeria for measures to support prices such as a price target or floor and a return to OPEC's quota system. Oil prices have more than halved to below $50 a barrel since June 2014 in a drop that deepened after the Organization of the Petroleum Exporting Countries in 2014 changed strategy to protect market share, rather than cut output to prop up prices as it did in the past. The strategy shift was led by Saudi Arabia, supported by other relatively wealthy Gulf members. Others, including Venezuela, Iran and Algeria, had misgivings and have continued to call for output cuts. These differences over short-term policy are informing the group's updating of its long-term strategy, the document indicates, and may not bode well for a harmonious meeting on Dec. 4, when OPEC oil ministers meet to review output policy. The 44-page document has 11 pages of comments from member countries added as an annex. "OPEC should be prepared to establish and defend a price floor, in particular, and to accept a temporary trade-off between lower market share and higher revenues," Algeria commented in the draft report. "It is our recommendation to agree upon a fair and reasonable price (band) then try to support it as long as this price seems a fair and reasonable price," read one of Iran's comments. Top producer Saudi Arabia, however, says the market determines oil prices. The kingdom did not make a comment on the draft report. OPEC governors, official representatives of the member-countries, are meeting at the group's Vienna headquarters this week to agree on the final draft of the report. Revenue And Market ShareIran, Algeria and Iraq, among the OPEC countries most hurt by a drop in oil prices, want to include different versions of the need for OPEC to maximise revenues as one of OPEC's first long-term objectives in the report. They note that discussions among the OPEC governors who have been meeting to agree on the long-term strategy report have not resulted in an agreement on some objectives. "Maximize long-term petroleum revenue of member-countries and safeguard their interests, individually and collectively, while enhancing the role of oil in meeting future energy demand," was what Algeria suggested as an OPEC objective. Algeria, referring to OPEC's decision of November 2014 to not cut supply said: "an additional element of uncertainty is represented by OPEC's behavior," according to the draft report. Iraq, boosting production and exports with the help of foreign oil companies, had its own suggestion. "OPEC member-countries should determine their own policies regarding the long term strategy (LTS) by creating a model for achieving maximum revenue through a balance between market share and prices," was one of Iraq's comments. Restoring QuotasIn its comments Iran, which is also preparing to boost exports and regain market share once sanctions are lifted, is also pressing to restore the OPEC quota system dropped in 2011. The group's output ceiling of 30 million barrels per day (bpd) does not specify quotas for the individual members and that "has not effectively contributed to oil market stability," Iran says. "Some of the OPEC member countries have enhanced their production rate based on their production capacity without paying attention to the production ceiling," was another comment submitted by Iran, the report showed. "OPEC production ceiling should be set for 6 or 12 months intervals proportionate to the estimated "call on OPEC" and then allocation of production for every member country could be agreed upon." Iran's suggestion was backed by Algeria, which commented that "it might eventually be necessary to revisit the quota system to make production management as realistic and equitable as possible." The long-term report is prepared by OPEC's research team in Vienna and traditionally cautions that it does not articulate the final position of OPEC or any member country on any proposed conclusions it contains. A decision to restore OPEC's quota system is to be determined only by the ministers when they meet on Dec. 4, but core Gulf OPEC countries oppose restoring it, OPEC sources say. (Reuters)
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Exxon Mobil Corp said on Friday third-quarter profit fell 47 percent on low crude prices but results were better than expected, helped by higher profit in the oil company's refining business. Crude prices have fallen more than 50 percent from last year's high above $100 a barrel. While the crude decline hurt Exxon's largest oil and gas business, it also boosted profit margins in refining by lowering feedstock costs. "International refining was the surprise that was greater-than-anticipated," said Brian Youngberg, senior oil analyst at Edward Jones. "Refining is the sweet spot for the integrateds this quarter. It reflects their scale and breadth of operations." To weather the downturn, many of Exxon's peers, including U.S. rival Chevron Corp, are slashing jobs and capital spending. But the world's largest publicly traded oil company is so far keeping its budget forecast intact and plans no restructuring charges, Jeff Woodbury, Exxon's head of investor relations, told analysts on a conference call. In 2015, Exxon expects to spend $34 billion, and less than that in the next two years. Still, Woodbury said spending so far this year is tracking lower than planned, so it is reasonable to conclude that the final number will come in below that forecast, he said. The company will issue its latest capital plan in March, Woodbury said. The Irving, Texas, company posted profit of $4.24 billion, or $1.01 per share, compared with $8.07 billion, or $1.89 per share in the same quarter a year earlier. Analysts on average had expected a profit of 89 cents per share, according to Thomson Reuters I/B/E/S. Refining profit nearly doubled from a year earlier to $2 billion in the third quarter, with Exxon's international refining unit turning in better-than-expected earnings of $1.5 billion. Earnings at Exxon's exploration and production business fell $5.1 billion to $1.4 billion. Oil and gas output increased 2.3 percent from a year earlier to 3.9 million oil-equivalent barrels per day (mboed). Exxon is still on track for output totaling 4.1 mboed for the full year, Woodbury told analysts. Shares of Exxon were up 0.8 percent at $82.90 on Friday afternoon. So far this year, the stock has fallen 10 percent. (Reuters)
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Foreign companies are in talks to buy a stake of up to 24 percent in the Bina refinery in India's Madhya Pradesh state which is jointly owned by Bharat Petroleum Corp and Oman's state oil firm, BPCL's chairman told Reuters on Thursday. The two owners want to boost the refinery's capacity by about 30 percent from 120,00 barrels per day (bpd), said BPCL Chairman S. Varadarajan. The expansion of the refinery, which has started to make money after quarters of losses, could cost $460 million and would be completed by 2018, Varadarajan said. BPCL and Oman Oil Company could make a public share offer next year if a deal is not sealed. "There are conversations with parties for up to 24 percent stake sale and some of them have shown interest," he said, declining to name the companies. "If the talks do not materialise in a deal, we will go for a public issue next year." Varadarajan also said BPCL could buy Latin American crude for its 190,000 bpd Kochi refinery in southern India once its capacity is raised to 310,000 bpd next year and its capabilities are enhanced to process cheaper and heavier grades. Currently the refinery processes sweet and heavy grades in equal proportion. The company could also buy Iranian oil for Kochi if sanctions on Tehran start to ease following successful talks on its controversial nuclear programme. (Reuters)
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Iraq overtook Saudi Arabia as the top crude exporter to India in September for the third time in 2015, according to tanker data obtained by Reuters, as the two biggest OPEC producers battle for market share in leading Asian buyers. Saudi Arabia also lost its top spot in China last month, with Russia overtaking the world's biggest crude exporter as the main supplier for the second time this year. Traders attributed the shift to a hike in Saudi's official selling price (OSP) of crude. India imported 640,300 barrels per day (bpd) of oil from Saudi Arabia last month, about 30 percent lower than in August and the weakest in a year, the data obtained by Reuters and compiled by Thomson Reuters Oil Analytics showed. The figure was still up 12.8 percent from a year ago. While Saudi's market share in India is shrinking, Iraq is expanding its hold over one of the world's fastest-growing markets by offering attractive pricing. "Saudi sells oil at OSP under term deals, while Iraqi oil is also sold in the spot market. And in an oversupplied market you often find Iraqi barrels trading at discounts to the OSP," said Ehasan Ul-Haq, senior analyst at London-based consultancy KBC Energy Economics. India shipped in about a fifth of its imports from Iraq in September, while Saudi Arabia's share dropped to 17 percent from about 22 percent in August. Faced with more competition in Asia, Saudi Arabia is trying to make inroads into new markets like Poland and along with other big exporters prepare for more competition from Iranian crude. "When Iran comes to market it will be a tough fight between Iran, Iraq and Saudi," said Haq. In the first half of India's fiscal year running from April to September, Saudi Arabia supplied nearly 19 percent more oil to India at about 776,000 bpd, while volumes from Iraq surged 36 percent to about 676,000 bpd. India is also stepping up purchases from Africa, where more crude is available after China raised shipments from Russia and the United States began processing its own shale oil. India imported nearly 27 percent more African crude in April-September, mainly from Angola and Nigeria. India, which is Iran's second-biggest customer behind China, bought about 17 percent more oil from Tehran in the April-September period, the data showed. Overall oil imports by India slipped 7.4 percent last month from August as Essar Oil, which rarely buys Saudi oil, shut its 400,000 bpd refinery for a month from mid-September for maintenance. (Reuters)
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