India, Africa to be major contributors to 112 million barrel/day of peak global crude oil demand in 2030: S&P
The global demand for crude oil is expected to see its peak in 2030 at 112 million barrels a day mark with India and Africa to be major contributors, according to S&P Global Commodity Insights. The current global demand of crude oil is at 103 million barrels per day, Pulkit Agarwal, head of India Content at S&P Global Commodity Insights, said on Thursday. The global demand for crude oil will peak to stay in the range of 112 million barrels a day in 2030 from the present level of 103 million barrels a day, he told PTI at S&P Global Commodity Insights: Media Roundtable Outlook 2024. India and Africa will be the major contributors to the 8.73 per cent increase in demand by 2030 as industrial activities will pick up in the region, Agarwal said. There will be increased use of clean cooking, automotives and setting up of refinernies by various economies, he said. However, the demand for crude oil in India will see its peak in 2040 to reach 7.2 million barrels a day from 5.2 million barrels a day at present, he said. On the price outlook he said, “In our base case, oil prices will likely hover above USD 80/barrel and can inch closer to USD 90/barrel by Q3 2024.” Gauri Jauhar, Executive Director, Energy Transitions & CleanTech Consulting, S&P Global Commodity Insights, said as India grows, it will also transition at a sustainable pace based on an underlying economic transition of mobility, urbanization and a desire for reliability. An energy transition will inevitably be a technology transition to reduce emissions, and the cleaner technology spectrum offers a range of near-term, medium-term and long-term solutions. These cleaner technologies will need financing and policy support, globally and in India, to reach giga scale, she said. Stuti Chawla, Associate Director, India/Middle East Chemicals Pricing, S&P Global Commodity Insights, said India is expected to remain a bright spot in Asia for petrochemical demand in 2024, given its strong economic growth and resilient industrial production. Greater demand, however, is unlikely to bring much relief to domestic producers struggling with pressure on margins, as prices of key bulk chemicals are expected to remain suppressed due to ample supplies and new capacities coming on stream. The market for chemical commodity products in India is expected to grow at around 7 per cent in 2023 and 8 per cent in 2024. The robust demand growth is being driven by a sharp pickup in India’s economic activity after it emerged from COVID-19 lockdowns. Elvis John of S&P Global Commodity Insights said India imposed a slew of restrictions on grains trade in 2023 amid rising domestic prices, fear of El Nino affecting crop production, and ahead of state elections and general elections in 2024. Domestic prices of non-Basmati rice moderated slightly with export curbs in place and arrival of new crop. However, market participants do not see a sharp fall in prices in the short term as they expect the government to be active in procurement ahead of numerous state elections and general election in 2024, he said.
PSUs’ petrol sales up 7.5%, diesel down 7.5% in November
State-run companies’ petrol sales rose 7.5% year-on-year in November while diesel sales fell by an equal percentage point. State companies sold 6% more jet fuel year-on-year in November and 1% less cooking gas, according to the provisional sales data provided by these companies. The oil ministry publishes consolidated sales data for the industry, including for the private retailers, by the tenth of every month, which gives a more accurate picture of the fuel demand in the country. State-run companies control around 90% of petrol pumps in the country but have been losing share in the countrywide sales of diesel and petrol this year after gaining market share last year. This is why their standalone sales growth figures aren’t indicative of overall industry growth. The festive season, which spreads over the last quarter of the calendar year in the country, is usually marked with higher sales of transportation fuels as people travel and shop more than usual, pushing up long-haul transport and factory activity. Record-high vehicle sales have also been boosting fuel demand. Compared to the November of 2019, petrol and diesel sales by state companies are up 25% and 1%, respectively.
India shows some reliance on Venezuelan oil after 3-year hiatus as US sanctions ease
India is set to restart imports of Venezuelan oil after a three-year hiatus, according to brokers and shipping fixtures, as it rushes to take advantage of a US move to ease sanctions on the South American nation. Private refiner Reliance Industries Ltd has booked two supertankers, C. Earnest and C. Genuine, which are scheduled to load crude cargoes from Venezuela between December to early January. Another fixture showed Very Large Crude Carrier Eucaly was also hired to transport Venezuelan crude to India in early December, again for Reliance. Together, the three could hold up to 6 million barrels of crude. A separate Petróleos de Venezuela SA report, however, indicated Eucaly could be sailing to China. India, the world’s third-biggest oil importer, was a major buyer of Venezuelan crude before sanctions were imposed by Washington, forcing its refiners to cede ground to Chinese competitors from 2021. Oil traders have been watching for a resumption of purchases since a temporary rollback of US sanctions on the South American producer’s oil industry in October. A spokesperson at Reliance did not respond to an email seeking comment on the matter. Tankers C. Earnest and C. Genuine are both Liberia-flagged and built in 2022, while Eucaly is older, built in 2005 and carrying a Panama flag, according to data compiled by Bloomberg. Shipbrokers cautioned the final destination could still change. The reappearance of India as a buyer is bad news for Chinese refiners, eager consumers of cheap Venezuelan crude. Discounts offered to China have narrowed over recent weeks, said traders participating in the Chinese crude market, in large part because of India’s return. Private refiners, mostly clustered in China’s northern Shandong province, have been the most resilient customers of Venezuelan oil for the past four years — but they haven’t been active in the market since the second half of October, the traders said, declining to be named as they are not authorized to speak publicly. India imported an average of around 10 million barrels per month from Venezuela before sanctions began, according to data from analytics company Kpler. Reliance purchased a monthly average of five supertankers from the Latin American producer in 2018-2019, Kpler’s crude analyst Viktor Katona said.
Petrol, diesel price revision only when oil price stabilises below USD 80
State-owned fuel marketing companies are likely to revert to daily revision in prices of petrol and diesel only when international oil prices stabilise below USD 80 per barrel on a sustained basis, industry officials said. Three state-owned fuel retailers — Indian Oil Corporation Ltd (IOCL), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) — which control roughly 90 per cent of the market, have kept petrol and diesel prices on freeze for a record 20th month in a row. This is despite the raw material (crude oil) cost surging last year, leading to heavy losses in the first half of 2022-23 fiscal year before easing rates propelled them to profitability. “There is considerable volatility in the international oil market and prices fluctuate wildly,” an official said. “Oil companies can cut prices by Re 1 per litre and everyone will applaud. But when international oil prices go up, will they be allowed to raise rates remains in doubt.” India is the world’s third largest oil consuming and importing nation. It imports more than 85 per cent of its oil needs and hence domestic pricing is linked to international rates. The basket of crude oil that India buys has averaged USD 83.42 per barrel in November, down from USD 90.08 of October and USD 93.54 of September. While at current prices, oil companies are making some money on petrol, diesel — the most consumed fuel accounting for almost 40 per cent of all petroleum products consumed in the country — but it has been in a “touch-and-go” scenario in recent weeks, another official said. “On some days there is profit on diesel but on other days there is loss. There is no consistent trend.” Three retailers had been recouping losses they incurred for holding rates when crude oil prices shot through the roof last year. In May, international oil prices and retail pump rates had come at par, but the subsequent surge widened the gulf between cost and price realised. “For oil companies to revert to daily market based price revision, oil prices will have to come below USD 80 on a sustained basis,” an official said. Petrol and diesel prices have been on a freeze since April 6 last year. Petrol costs Rs 96.72 a litre in the national capital and diesel comes for Rs 89.62 per litre. The three firms made bumper profits in April-September — first half of the current fiscal — but considering the low earnings of last year, they are yet to recoup all losses, officials said. Consider this, IOCL posted a net profit of Rs 26,717.76 crore this year as compared with a full year profit of Rs 8,241.82 crore in 2022-23 (April 2022 to March 2023). In 2021-22 (considered a normal year), the company had posted a profit of Rs 21,762 crore for the full year. Considering that to be a normalised earnings, for two years (2022-23 and 2023-24), it should make about Rs 42,000 crore. In one-and-half years (April 2022 to March 2023 full fiscal and April 2023 to September 2023), the company earned about Rs 35,000 crore. Similar is the situation with BPCL and HPCL. “Not all of the losses have been recouped,” an official explained. “When prices were high in the immediate aftermath of Russia’s invasion of Ukraine, there were huge losses. These losses were trimmed in the second half of 2022-23. In the current year, the losses are being recouped by making profits when oil prices are low.” International oil prices have firmed up since August, leading to margins of three retailers turning negative again. The OMCs’ marketing margins — the difference between their net realised prices and international prices — have already weakened significantly from the high levels seen in the quarter ended June 30, 2023 (Q1 fiscal 2024). Marketing margins on diesel turned negative since August while margins on petrol have narrowed considerably over the same period as international prices increased.
Oil Prices Retreat As OPEC+ Cuts Another 684KBPD, Brazil Joins OPEC+
Oil prices began to retreat on Thursday afternoon as it became clear that OPEC+ members were agreeing to voluntary cuts beginning in the new year, and that those cuts would be announced only by each member country instead of by the group as a whole. OPEC+ announced during the full OPEC+ meeting on Thursday that because all the cuts agreed to today were voluntary, they would be announced not by the group, but by the individual member states. Immediately following the meeting’s kickoff, it was also announced that Brazil would join the OPEC+ group effective in January. Three weeks ago, OPEC’s Secretary General HE Haitham al-Ghais said that the group’s door was open should Brazil wish to join. Brazil has a goal of substantially increasing its crude oil production to become the world’s fourth-largest producer by 2030. In September, Brazil exported $3.92 billion in crude oil, while importing $681 million, according to OEC data. This level of exports is a 13% increase year over year, with China as the primary destination. Brent crude oil prices, which had been trading up around 1.5% during the JMMC meeting, sank to +0.16% on the day in the absence of an announced production strategy from the group’s leadership. WTI slipped into the red with a loss of 3.43% on the day following the full meeting. The specifics of what was agreed to for the first quarter of 2024 among the OPEC+ members: Algeria agreed to cut oil production by another 51,000 bpd Kazakhstan agreed to reduce oil output by an additional 82,000 bpd Saudi Arabia agreed to extend its 1 million bpd output cut Russia’s Deputy Prime Minister Alexander Novak said that it would deepen voluntary oil export cuts by 300,000 bpd, and said it would roll over the existing 500,000 bpd vountary production cuts Oman will cut another 42,000 bpd Iraq will voluntarily cut 211,000 bpd Kuwait will cut 135,000 bpd The UAE will cut 163,000 bpd Angola not only didn’t announce an additional voluntary cut, but it publicly rejected its current quota, and reiterated its proposal for a 1.18 million barrel quota beginning in January. It added that it will not stick to the new OPEC quota. Not including cut extensions from Saudi Arabia and Russia, the additional voluntary cuts beginning in January and carrying through to the end of March is 684,000 bpd. All together, the total voluntary cuts for the first quarter is 2.184 million bpd. The next OPEC+ meeting is scheduled for June 1, 2024.
GAIL’s 3 GSRTC Diesel buses converted to LNG
GAIL celebrates the remarkable accomplishment as 3 GSRTC Diesel buses that were converted to LNG covered an impressive 6,45,105 KM in just 431 days.
HPCL will commission Chhara LNG terminal in two-three months
Hindustan Petroleum Corporation Limited (HPCL) is planning to commission Chhara LNG import terminal with a capacity of 5 million tonnes per annum in Gujarat in the next two-three months. A senior official of the company gave this information on Thursday and said that 6-7 parties have already offered to place orders.
Traders Don’t See OPEC+ Substantially Lifting Oil Prices
Portfolio managers continued to be bearish on crude oil prices ahead of the now-delayed OPEC+ meeting, further selling off Brent and WTI futures and options and halving the net bullish bet on oil in two months. The bearish positioning in crude oil in the past eight weeks suggests that hedge funds and other money managers are skeptical about OPEC+ managing to offset non-OPEC+ supply rising faster than expected, as well as concerns about economic growth. Some of the moves down in oil were also triggered by technical selling, while some hedge funds have stayed on the sidelines waiting for the next decision of the OPEC+ group. In the week to November 21, bullish bets were slashed – with net-long positions being cut by over 19,000 positions to the lowest since June, according to data from the ICE Futures Europe exchange and the CFTC. The latest Commitment of Traders (COT) report was released on Monday, delayed due to Thanksgiving last week. “Unsurprisingly, given the weakness seen in the market, speculators continued to reduce their net long in ICE Brent over the last reporting week,” ING strategists Warren Patterson and Ewa Manthey said on Tuesday. The net long position – the difference between bullish and bearish bets – in Brent Crude futures slumped by 15,880 lots to 155,105 lots as of November 21—the smallest net-long position since early October. Most of the sell-off was due to the liquidation of long positions. In NYMEX WTI Crude, portfolio managers cut their net long by 19,751 lots over the last reporting week to 104,545 lots. This was the smallest bullish position since July, ING’s analysts noted. “While longs are liquidating as sentiment in the market sours, there is also likely an element of speculators taking risk off the table ahead of the OPEC+ meeting,” they said. Amid record-high U.S. crude oil production, money managers have been selling WTI futures for eight consecutive weeks, reducing their position by the equivalent of 216 million barrels since the end of September, according to data compiled by Reuters market analyst John Kemp. The combined net long in WTI and Brent has seen eight weeks of selling apart from a geopolitics-driven bid higher in the week of October 17, after the Hamas attack on Israel, Ole Hansen, Head of Commodity Strategy at Saxo Bank, said, commenting on the latest report on traders’ positioning. During those eight weeks, the combined net long in WTI and Brent has more than halved to 260,000 lots, driven by 188,000 lots of long liquidation and 112,000 lots of fresh short selling, Hansen added. Traders are now expecting the next move from OPEC+, which is set to hold a virtual meeting on Thursday, November 30, if the group doesn’t delay it again, as some reports suggested on Tuesday. A rollover of the current cuts is the likely scenario, according to OPEC+ sources who have spoken to Reuters. The alliance is said to be continuing talks with African producers about their quotas, but no agreement has been reached as of late Tuesday. If the current cuts are only extended, they could erase most of the surplus on the market expected early next year, ING’s analysts said. “However, if OPEC+ want to provide more solid support to the market and ensure that we do not see stocks building early next year, they will need to agree on deeper and broader cuts,” they added. “The Saudis and OPEC+ have made a habit of surprising markets in recent years when it comes to their meetings. However, with aggressive cuts already in place, it does leave one wondering the degree to which the group could surprise the market with deeper-than-expected cuts.”
India becomes the 2nd largest supplier of refined oil to Europe, thanks to cheap Russian crude
India has become the European Union’s second-largest supplier of refined petroleum products in 2023, despite relying almost fully on imported crude, thanks to the availability of cheap Russian oil imports. Since Russia’s invasion of Ukraine and the imposition of several trade sanctions on Moscow, Saudi Arabia has been the largest supplier of refined petroleum products to Europe. According to reports, the European Union imported a cumulative 7.9 million tonnes of refined petroleum products from India between January and September of this year. This figure is more than double the amount on a yearly basis and triple the volumes from the same period in 2021. India’s refined petroleum products volume for this year catapulted it from sixth place in 2022 to first place in 2023. France, the Netherlands, and Italy emerged as the three biggest importers, followed by Croatia, Latvia, Romania, and Germany. India holds the position of the second-largest oil refiner in Asia after China. The country imports around 40 percent of the crude oil it refines from Russia, with volumes increasing exponentially due to a discount on Russian crude oil amidst Western sanctions. Interestingly, Russian crude continues to make its way into European markets indirectly via alternative channels. The Centre for Research on Energy and Clean Air (CREA), Bulgaria’s Black Sea, Neftochim Burgas refinery imported over 4.95 million tonnes of Russian crude between January and October 2023. Bulgaria was granted an exemption from the EU’s Russian oil embargo implemented in late 2022 in order to ensure sufficient domestic supply. However, Russian oil is being supplied to the European markets via India (refined oil) and crude through smaller countries in Europe. CREA finds Bulgaria as the fourth-largest imported of Russian seaborne crude, after India, China, and Turkey. It is worth mentioning here that Western countries led by the United States of America and the European Union imposed economic and other trade sanctions on Russia after its offensive in Ukraine in February 2022. Diesel exports Europe suspended most oil shipments from Russia almost a year ago, but continued to buy diesel that may well have been made from Russian crude oil. The region’s imports of diesel from India, one of the largest importers of Russian crude oil, are on course to soar to 305,000 barrels per day (bpd), the highest since at least January 2017, data compiled by the market intelligence agency Kpler showed. Since India imports crude oil from other countries such as Saudi Arabia, Iraq, Iran, and a number of other countries, it cannot be accurately said that New Delhi’s diesel exports to Europe is made of Russian crude. However, given that the volume of exports increasing significantly, one can easily assume that the diesel being exported to Europe is made of Russian crude. Meanwhile, increasing Moscow’s crude deliveries has given Indian refineries the ability to produce abundant diesel and boost exports. Arrivals into Europe in November include a rare shipment from Mumbai-based Nayara Energy Ltd, which imported almost 60 percent of its crude oil from Russia this year. Reliance Industries Ltd, Europe’s leading supplier of Indian diesel, draws more than a third of its crude oil from Russia, Kpler reported. This is considered Europe’s fundamental shift towards India after Russia’s invasion of Ukraine. The European Union banned most seaborne imports from Russian crude oil in December and oil products in February.
Saudi Arabia Expected to Cut the Price of Its Oil to Asia
Saudi Arabia is expected to reduce its official selling price for crude for Asian buyers, a survey among analysts conducted by Bloomberg has shown. According to the survey sample, including a total of six refiners and traders, the move would be prompted by intensified competition for the Asian market and cheaper crude from the United States and Europe, as well as Guyana. The influx of non-Middle Eastern oil comes as Brent crude, the global benchmark, is at near parity with the Dubai benchmark, according to PVM Oil Associates. The development, which is unusual, is the result of OPEC production cuts—notably Saudi Arabia’s voluntary cut—that have pushed Middle Eastern oil prices higher, and closer to Brent. As a result, Bloomberg reports, non-Middle Eastern oil has become more attractive for bargain hunters in Asia, doubling as evidence of the unintended effects of the production cuts, such as increased demand for less expensive oil. According to the Bloomberg survey, the average price cut forecast is for $1.05 per barrel of Arab Light, for deliveries in February next year. However, the individual forecasts ranged between $0.75 per barrel and $2 per barrel, the news outlet also reported. In the past few months, Saudi Arabia has been raising its prices for Asian buyers. In fact, it raised them for five months in a row until November, before announcing it would keep prices for Arab Light unchanged for December deliveries, earlier this month. It did, however, raise the price for Arab Extra Light by $0.70 per barrel. This suggests healthy enough demand for Saudi barrels in Asia despite competition from the U.S. Guyana and the North Sea. Supply, on the other hand, is likely to remain tight for the foreseeable future. The overwhelming expectation of analysts and traders from the OPEC+ meeting set to take place tomorrow is that the Saudis and the Russians will extend their production cuts into 2024. At this point, they probably can’t afford not to.