Category Archives: Trade and commerce
Oil falls to $37, near 11-year low, as excess supply weighs
Oil fell to around $37 a barrel on Monday, trading within sight of an 11-year low, pressured by excess supply that has led to prices more than halving since the downturn began in mid-2014. US crude was trading above global benchmark Brent, having earlier in December risen to a premium for the first time in about a year following the lifting of a 40-year-old ban on most US crude exports.
Brent crude was down 88 cents at $37.01 a barrel at 1429 GMT. It fell to $35.98, an 11-year low, on Tuesday. US crude was down 97 cents at $37.13. Trading volume was lighter than normal due to a British public holiday. Figures from the Organisation of the Petroleum Exporting Countries imply a glut of more than 2 million barrels per day, equal to over 2 percent of world demand. Oversupply is expected to persist into the earlier part of next year.
In Japan, total oil product sales in November fell to a 46-year low. In Europe, demand growth for oil products turned negative in October, analysts at JBC Energy said in a report, citing figures from the Joint Organisations Data Initiative – the first year-on-year decline this year, JBC said.
The drop in prices gained impetus after OPEC, led by top exporter Saudi Arabia, a year ago dropped its longstanding policy of cutting output to support prices in favor of defending market share. While the price collapse has partly achieved OPEC’s goals by curbing growth of competing supplies, it has put finances in producing nations under more strain, even in the relatively wealthy Gulf states.
Saudi Arabia on Monday announced plans to shrink a record state budget deficit with spending cuts and a drive to raise revenues from sources other than oil. The government of the world’s top oil exporter ran a deficit of 367 billion riyals ($97.9 billion) in 2015. Its 2016 budget plan aims to cut that to 326 billion riyals.
Indian Oil Corporation to invest Rs.1.75 lakh cr to expand
Indian Oil Corporation (IOC), India’s largest oil firm, will invest Rs.1.75 lakh crore over the next seven years on expanding refinery capacity, building petrochemical plants and laying pipelines, a company official said.
The plan includes spending Rs.34,555 crore in the 15 million tonnes a year from Paradip oil refinery in Odisha that has recently started producing fuel.
Besides, the refinery expansion projects planned include raising Panipat refinery capacity to 20.2 million tonnes from 15 million tonnes currently at a cost of Rs.15,000 crore and raising capacity at Koyali, Mathura and Barauni units by 2020, the official said.
Paradip has started producing fuel and helped IOC regain the top refinery slot in the country, the official said.
Prior to Paradip, its eight refineries had a cumulative capacity of 54.2 million tonnes of crude oil. Paradip helped IOC overtake Reliance Industries, which has twin refineries at Jamnagar in Gujarat with a capacity of 62 million tonnes.
Essar Oil is the only other private refiner having a 20 million tonnes a year unit at Vadinar in Gujarat.
The official said IOC is looking at raising capacity of its 13.7 million tonnes a year Koyali refinery in Gujarat by 4.3 million tonnes and hiking capacity of Mathura refinery in Uttar Pradesh by three million tonnes to 11 million tonnes in two stages, first to 9.2 million tonnes and then to 11 million tonnes.
A small capacity addition of 0.5 million tonnes is also planned at 7.5 million tonnes Haldia refinery in West Bengal. Also Barauni refinery in Bihar will be expanded from 6 million tonnes to 7 million tons in first phase and than to 9 million tonnes in second, he said.
“We are also setting up a 7,00,000 tonnes per annum polypropylene (PP) plant at a cost of Rs.3,150 crore at Paradip. The plant is to be built by 2017-18,” the official said.
IOC will use propylene from cracked LPG and ethylene from refinery off-gas to produce plastic that is used in making furniture, disposable cups and trays, printed packaging material, plain and transparent films, currency notes, food packets and pressure-sensitive tapes. The official said the company was also looking at setting up a 5 million tonnes a year LNG import terminal at Ennore in Tamil Nadu. The new expansion planned will cater to fuel needs of north and western India, he added.