Oil Prices Continue To Slip Even As Crude Oil Inventories Decline
Crude oil inventories in the United fell this week by 3.939 million barrels, the American Petroleum Institute (API) data showed on Tuesday, with analysts expecting a 1 million barrel draw. The total number of barrels of crude oil gained so far this year is still more than 34 million barrels. This week, SPR inventory dropped for the fifth week in a row, losing 2 million barrels for the week to reach 364.9 million barrels—the lowest amount of crude oil in the SPR since October 1983. U.S. crude oil production fell 100,000 bpd during the week ending April 21, to 12.2 million bpd. U.S. production is now 900,000 bpd lower than the peak production seen in March 2020, but 300,000 bpd higher than this time last year. The price of WTI was trading down sharply on Tuesday in the run-up to the data release, below $72 per barrel on renewed market fears over unremarkable industrial data out of China and the possibility that the Feds could hike rates again later this week—both factors could have an impact on global oil demand. Brent crude was also trading down on the day. By 3:30 p.m. EST, WTI was trading down $3.95 (-5.22%) on the day at $71.71 per barrel, a loss of about $5.40 per barrel on the week. Brent crude was trading down $3.93 (-4.96%) on the day at $75.38—down roughly $5.40 per barrel from this same time last week. WTI was trading at $71.62 shortly after the data release. Gasoline inventories rose by 400,000 barrels after falling in the week prior by 1.919 million barrels. Distillate inventories fell by 1 million barrels after increasing by 1.693 million barrels in the week prior. Inventories at Cushing, Oklahoma, increased by 700,000 barrels—after rising by 465,000 barrels last week.
India buying Russian crude, laundering refined products into Europe: CREA report
Helsinki-based Centre for Research on Energy and Clean Air (CREA) has said in a report that India is among the top five countries, including China, that is purchasing cheap Russian crude oil and converting it into refined petroleum products, which are “laundered” in Europe and G7 countries. “We call these five countries that have increased purchases of Russian oil and ‘launder’ it into products shipped to countries having sanctioned Russian oil the ‘laundromat’ countries,” CREA report said. The ‘laundromat countries’ are China, India, Turkey, the UAE and Singapore. The price-cap coalition countries include the European Union, G7 countries, Australia and Japan, it added. The report explained that Russia is forced to offer discounted oil to ensure it is able to find buyers, the laundromat countries are refining larger volumes of imported Russian crude to then export refined products to sanction imposing countries (+10 million tonnes or +26 per cent of refined oil products exported to price cap coalition countries one year post invasion compared to the prior 12 months). This is currently a legal way of exporting oil products to countries that are imposing sanctions on Russia as the product origin has been changed. This process provides funds to Putin’s war chest. The Ministry of Petroleum & Natural Gas (MoPNG) did not respond to the report till the time of going to the press. Private Indian refiners The CREA report has also pointed out that Sikka and Vadinar ports in India are among the top ports that are importing Russian crude oil and exporting refined petroleum products to Europe. The report claims that Sikka port, which serves RIL’s Jamnagar refinery, is the biggest oil product export port to the price-cap coalition countries, and the largest importing port in the world of seaborne crude oil from Russia. It also claims that the Vadinar port is of great value to the Russian oil industry, especially Rosneft. The Vadinar oil refinery, owned by Nayara Energy, is located near the port, and Rosneft possesses a 49.13 per cent share of Nayara Energy. This situation where a Russian company owns an oil refinery in a third country highlights a possible way of circumventing sanctions. Reliance Industries and Nayara Energy also did not respond to the findings of the report till the time of going to the press.
IOC seeks LNG cargo for Dhamra terminal
State-run Indian Oil Corp has issued a tender seeking one cargo of liquefied natural gas(LNG) for delivery to the country’s east coast Dhamra terminal, said two industry sources on Tuesday. The cargo is sought on a delivered ex-ship (DES) basis, with a delivery window of Sept. 23-27. The tender closes on May 2, added the sources. The Dhamra terminal had received its first LNG cargo on April 1, and is expected to begin commercial operations 30-45 days after receiving the first shipment.
Indian government may invest $3.6bn in oil marketing companies
Indian government could make an equity investment of Rs300bn ($3.66bn) in the country’s three oil marketing companies (OMCs), reported Economic Times, citing sources. The capital infusion will be after the OMCs — Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) — submit their capital plans to the government. According to a government official, “The Rs300bn that was set aside as capital support for the OMCs in this budget would go to them in the form of equity infusion. But this will be after they present the finance ministry with a set of capital investment projects. Primarily, the projects will be related to emission reduction, refinery upgradation etc.”
India will achieve 20% ethanol-blended petrol target by 2025; maize to play important role, says Piyush Goyal
Food and Consumer Affairs Minister Piyush Goyal on Tuesday expressed confidence that the country will achieve the target of 20 per cent blending of ethanol with petrol by 2025 and asserted that maize crop will play an important role in implementation of this programme. Addressing a national seminar on maize to ethanol, Goyal said ethanol is a “sunrise sector” and asked the industry to set up factories for manufacturing of this green fuel which can operate on on dual feed stock (sugarcane and food grains). The minister highlighted that the blending of ethanol with petrol has increased to 10 per cent in 2021-22 marketing year from just 1.53 per cent in 2013-14 on the back of efforts made by farmers and industry, aided by favourable government policies. He said the supply of ethanol to oil marketing companies (OMCs) increased to 408 crore litre in 2021-22 from 38 crore litre in 2013-14. Goyal termed the target of 20 per cent blending of ethanol with petrol as “ambitious and bold” but said this can be achieved if all stakeholders work towards it sincerely. “As we have increased the blending to around 10.5 per cent from 1.5 per cent in the last nine years, we will certainly achieve 20 per cent target,” he added. The minister stressed on the need to boost ethanol production to meet this target and said the focus should be now on making ethanol from maize crop, since there is limitation to increase supply from sugarcane crop. To achieve the target of 20 per cent by 2025, about 1,016 crore litres of ethanol would be required. About 334 crore ethanol would be required for other usage. Therefore, there is a need to create a capacity of 1,700 crore litres, considering plant operates at 80 per cent efficiency. Goyal said the ethanol production has significantly helped sugar industry as well as sugarcane farmers and the same can be replicated in maize. “If we have to jump from 10 per cent blending to 20 per cent, maize will have a major role to play… maize is better for making ethanol. It is eco-friendly crop as it can be grown with less water,” he said, adding that this will boost farmers’ income because of assured market. Goyal said the agriculture ministry is working to increase productivity and production of maize crop. The minister noted that higher blending of ethanol with petrol will be beneficial for farmers, environment and the overall India’s economy. The ethanol sector has attracted huge investments and helped in creation of jobs. He said India’s crude oil import bill could come down by Rs 50,000 crore, leading to huge saving of foreign exchange reserve. The minister exhorted industry to set up factories citing great business opportunity and said the government is ready to support. “There is huge potential in maize. you should focus on dual feedstock (cane and grains) to produce ethanol,” he said, while emphasising on increasing the implementation speed to achieve the 20 per cent blending target. Goyal said the auto industry has realised that ethanol is a reality. He said the work is going on towards rolling out flexi fuel engine and ethanol pumps. Earlier, Food Secretary Sanjeev Chopra said the target is to reach 12 per cent blending in 2022-23, 15 per cent in 2023-24 and 20 per cent in 2024-25. He said the requirement of ethanol is estimated at 1,300 crore litre, of which 650 litres should come from sugarcane and the rest from other sources including grains. Chopra said the ethanol production from maize needs to be encouraged. For this, he said, maize production needs to be raised from 34 million tonnes to 42-43 million tonnes, besides some special price incentives. Subodh Kumar Singh, the additional secretary in the department of food and public distribution, said there is a need to increase maize productivity and also percentage recovery of ethanol from maize. The requirement of food grains for ethanol production would be 165 lakh tonnes, Singh said.