MCX CRUDE OIL

Prepared by: Jay Modi B37 Harsh Patel B46 Jigar Prajapati B50

INTRODUCTION
Mixture

of liquid hydrocarbons Considered as Black Gold Almost all industries are dependent on oil Accounts for 40 % of worlds primary energy consumption Leader in the Indian energy commodities exchange Prices are highly volatile U.S ,China, Japan are largest oil consumers India is one of the top 10 consumers of Crude oil

OPEC
Founded

in Baghdad, Iraq in 1960 Organization of 11 developing countries Emerged as a single largest price influencing factor OPEC controls almost 40 % of the world's crude oil It accounts for about 75 % of the world's proven oil reserves Its exports represent 55 % of the oil traded internationally

TYPES OF CRUDE OIL

West Texas Intermediate
Density(in API Gravity) 39.6 %

Brent Crude Oil

38-39 %

Sour Crude Oil (Middle East)

31-37 %

Sulphar Quality

0.24 % High

0.4 % or less Medium

2.05 % or less Low

CRUDE OIL UNITS

1

US barrel = 42 US gallons 1 US barrel = 158.98 liters 1 tonne = 7.33 barrels 1 short ton = 6.65 barrels

CONTRACT SPECIFICATIONS(MCX)
Symbol Contract listing Trading Unit/Contract size CRUDEOIL Contracts available for all 12 calendar months in a year 100 Barrels

Quoted size
Maximum order size Tick size Daily Price Band Initial Span Margin Maximum Allowable open Position

Rupees/barrel
10000 barrels 1 rupee 4% 5% Individual:480000 barrels Members:2400000 barrels or 15 %

Trading Period

Monday-Saturday

Crude Oil Price

Source:- Energy Information Administration and Bureau of Labor Statistics 2012

FACTOR AFFECTING CRUDE OIL PRICE

Production Supply Global oil Inventories Financial Market Demand Non OECD Demand Spot market

SUBSIDY
Indias subsidy bill zoomed to Rs 2.16 trillion or 2.5% of GDP It was due to two reason: High Crude Oil prices Fertilizer subsidies, primarily on account of imported non-urea fertilizers Last year budget government pegged curde oil price of brent at $90. This year they kept the same at $115 Next year government has reduced the budgeted amount for oil subsidy to Rs43580 crore

INFLATION
Crude

oil price move up or down, inflation follows in the same direction Crude oil price increases, its directly affects the rate of inflation. When the prices crossed $100/barrel in 2008, inflation also went up to 12.27% which was highest for India in previous two decades

STEPS TAKEN BY THE GOVT. AND RBI

What Govt. did ? 1. Provided huge amount of subsidies to oil companies to keep them solvent 2. This increased domestic prices of diesel and petrol 3. Start looking for alternate energy options to prevent future oil shocks What RBI did? Increase in CRR, Repo rates. (i.e. used monetary tools to calm down the heat)

WHEN OIL PRICES MOVES UP :

1. Inflation

increases 2. Govt. spending on subsidy increases 3. Foreign currency reserves reduce 4. Our export becomes weaker 5. GDP is affected negatively 6. Share market crumbles 7. Investment decreases

INDIAS OIL IMPORTS PER COUNTRY

Libya, 0.09% Azerbaijan, 0.61% Gabon, Egypt, 1.65% 0.09% Ivory Cost, Sudan, 0.41% 0.09% Guinea, 0.52% Cameroon, 0.29% Congo, 0.32% Nigeria, 8.19% Norway, 0.38%

Iran, 10.51%

Algeria, 1.22% Malaysia, 1.36%

Brunei, 0.64% Australia, 0.38% Venezuela, 5.53% Kuwait, 10.28% Angola, 5.24% Iraq, 13.98%

Mexico, 1.33% Equador, 0.17% Colombia, 0.52% brazil, 2.20% Yemen, 0.75% S Arabia, 18.85% UAE, 9.15%

Qatar, 3.76%

Oman, 1.51%

HUBBERTS PEAK
Hubbert assumed that after fossil fuel reserves are discovered, production at first increases approximately exponentially, as more extraction commences and more efficient facilities are installed At some point, a peak output is reached, and production begins declining until it approximates an exponential decline His theory states that the rate of petroleum production tends to follow a bell-shaped curve. It is one of the primary theories on peak oil

PREVAILING DUTIES & LEVIES ON CRUDE OIL Basic Customs Duty: 10% Cess: Rs.1800 per metric tonne NCCD: Rs.50 per metric tonne Education cess: 2% Octroi: 3% War fedge: Rs.57 per metric tonne

THANK YOU