Oil Prices Continue to Fall Amid Growing Concerns Over Chinese Demand
Crude oil prices declined further early on Tuesday after more economic reports from China suggested weaker-than-expected economic growth. Brent crude slipped below $80 a barrel, with West Texas Intermediate trading just above $75 per barrel earlier today. This move in prices came as Reuters reported on a poll among economists expecting China’s manufacturing activity to shrink for the third month in a row. Staying with China, Citi cut its outlook on the country’s economy yesterday, now expecting GDP growth at 4.8%, down from 5% in an earlier forecast, after second-quarter growth came in below predictions. In some bullish news, ANZ analysts noted that the outcome of the Venezuelan elections could lead to lower global supply if the United States tightens its sanctions on Caracas. The country’s electoral authority declared Nicolas Maduro the winner of the presidential vote but the opposition is claiming it won 73% of the votes. “Nicolas Maduro’s victory in the latest Venezuelan election is a headwind for global supply, as this could result in tighter US sanctions,” ANZ said in a note, as quoted by Reuters, estimating the potential effect of tighter sanctions at between 100,000 and 120,000 bpd in daily Venezuelan output. Later in the week prices could move in either direction, with a Fed meeting scheduled for Wednesday that could reignite hopes of an interest rate cut before the end of the year. A day later, OPEC is holding a monitoring meeting and, according to Bloomberg, some market players appear to expect it might decide to roll back some of the production cuts. In reality, this is extremely unlikely in the current price environment, as the cartel made a note of saying the rollbacks will only be implemented if the market environment is right, meaning prices are high.
No Ethanol-Diesel Mandate Yet, Says Petroleum Minister Hardeep Puri
Petroleum Minister Hardeep Puri announced in Parliament on Monday that there are no current plans to mandate the blending of ethanol with diesel, describing the initiative as still in its experimental phase during Question Hour in the Rajya Sabha. Puri explained that oil marketing companies have conducted tests blending up to 7% ethanol with diesel in collaboration with the Automotive Research Association of India and select auto companies. Initial results indicate a flashpoint reduction to 15 degrees Celsius with a 5% blend, raising concerns about material compatibility, fuel stability, and potential fuel tank deposits. As the definition goes, the flash point is the temperature at which fuel ignites when exposed to a flame under controlled heating. Puri also highlighted the success in ethanol-petrol blending, which began in 2014 and is expected to reach 20% by 2025. The move aims to cut oil import costs, enhance energy security, and reduce carbon emissions.
‘Among the petroleum items, crude oil could be brought under GST first’: CBIC Chairman
Higher duty on gold was not only fueling smuggling but also causing market distortion and revenue loss, as it led to imports in non-bullion forms under various free trade agreements (FTAs) where they qualified for lower or even nil rates, Central Board of Indirect Taxes & Customs (CBIC) Chairman Sanjay Kumar Agarwal said in an interview with Soumyarendra Barik and Ravi Dutta Mishra. Agarwal stated that tariff rationalisation is undertaken with an objective to promote domestic manufacturing and boost exports and that the roadmap to bring petroleum products under the ambit of the Goods and Services Tax (GST) regime could start with crude oil as it would help integrate the entire petroleum sector.