As crude oil prices keep soaring and the Centre refuses to bail out public sector oil marketing companies, which are under tremendous strain, the oil crisis has literally reached your neighbourhood gas station. Vehicle owners can no longer be sure that petrol or diesel will be available on demand. Beginning Tuesday, Bharat Petroleum Corporation Limited has put its petrol pumps across the country on a "rationed" supply. BPCL has adopted the drastic system because of a severe cash crunch for buying oil products. Other oil majors like as HPCL and IOC too are facing a cash crunch given the government's refusal to allow an increase in retail prices, which has been in the offing several times in the last few months. Amarjit Singh, vice-president of the Petro Dealers' Association in Mumbai, said that BPCL petrol-pump owners were informed on Tuesday that every dealer would receive only a limited quota every month. "Every petrol dealer will receive petrol/diesel equivalent to the sale that was done in the same period last year. For instance, my pump sold around 80 kilolitres in May last year. I will receive a similar quantity or less this month," he said. In effect, this means that if a dealer exhausts his quota within, say, 25 days, due to the growing demand for petrol from the ever-growing automobile sector, he has to down the shutter for the remaining days of the month. The company has told dealers that the move is only aimed at extending the available products for a longer duration.
A high-ranking BPCL official, requesting anonymity, confirmed that rationing has been done across the country and would, in effect, be initially for four to five months or less if the issue of payment is resolved earlier. HPCL officials refused to comment while IOC's N Srikumar said: "There is no quota from our end and there is no such move from our end." Singh said the petrol dealers had proposed to BPCL that they would keep the petrol pumps open only for a limited period every day. "Some of us are open till late at night or all 24 hours.
We have proposed that the petrol pumps will be open only from 7am to 10pm every day. It does not make sense to work longer hours if we are going to run out of petrol before the month-end and have to shut shop." The government, he said, must act soon as it is a very difficult situation.
Thursday, May 22, 2008
Why oil prices are at a record high????????
U.S. crude oil hit an all-time high of $130.47 a barrel.
Robust demand for crude and a weak dollar have fuelled the rally from a dip below $50 at the start of 2007.
Adjusted for inflation, oil is now above the $101.70 peak hit in April 1980, according to the International Energy Agency, a year after the Iranian revolution.
DOLLAR WEAKNESS
The fall in the value of the dollar against other major currencies has helped drive buying across commodities as investors view dollar assets as relatively cheap.
It has also reduced the purchasing power of OPEC's revenues and increased the purchasing power of some non-dollar consumers.
OPEC oil ministers have noted that although prices are rising to record nominal levels, inflation and the dollar have softened the impact.
Some analysts say investors have been using oil as a hedge against the weaker dollar.
FUNDS
Since the Federal Reserve cut U.S. interest rates in mid-August last year and central banks pumped billions of dollars into financial markets to ease a credit crunch, oil and gold have risen.
Investment flows from pension and hedge funds into commodities including oil have boomed, as has speculative trading. At the same time, the credit crunch has brought some other markets, such as the U.S. asset-backed commercial paper market, to a virtual standstill.
Some of that money has found its way into energy and commodities, analysts say.
DEMAND
While previous price spikes have been triggered by supply disruptions, demand from top consumers the United States and China is a main driver of the current rally.
Global demand growth has slowed after a surge in 2004 but is still rising and higher prices have so far had a limited effect on economic growth.
Analysts say the world is coping with high nominal prices because, adjusted for exchange rates and inflation, they have been until recently lower than during previous price spikes and some economies have become less energy intensive.
OPEC SUPPLY RESTRAINT
The Organization of the Petroleum Exporting Countries, source of more than a third of the world's oil, started to reduce oil output in late 2006 to stem a fall in prices.
Fewer OPEC barrels entering the market helped propel the rally and consumer nations led by the International Energy Agency have urged OPEC to pump more oil.
At its meetings since December, OPEC has agreed to leave output unchanged, saying there is enough crude in the market. It next meets formally on September 9.
Few in the group believe there is much it can do to tame a market it says defies logic.
NIGERIA
Supply of crude from Nigeria, the world's eighth-largest oil exporter, has been cut since February 2006 because of militant attacks on the country's oil industry.
Oil companies and trading sources have detailed 559,000 bpd of shut Nigerian production due to militant attacks and sabotage.
IRAN
Oil consumers are concerned about supply disruption from Iran, the world's fourth-biggest exporter, which is locked in a dispute with the West over its nuclear program.
Western governments suspect Iran is using its civilian nuclear program as a cover to develop nuclear weapons. Iran denies this, saying it wants nuclear power to make electricity.
IRAQ
Iraq is struggling to get its oil industry back on its feet after decades of wars, sanctions and underinvestment.
Exports of Kirkuk crude from the country's north are stabilizing as the system recovers from technical problems that had mostly idled the pipeline since the U.S.-led invasion of Iraq in March 2003.
REFINERY BOTTLENECKS
Refiners in the United States, the world's top gas guzzler, struggled with unexpected outages which have drained inventories.
Robust demand for crude and a weak dollar have fuelled the rally from a dip below $50 at the start of 2007.
Adjusted for inflation, oil is now above the $101.70 peak hit in April 1980, according to the International Energy Agency, a year after the Iranian revolution.
DOLLAR WEAKNESS
The fall in the value of the dollar against other major currencies has helped drive buying across commodities as investors view dollar assets as relatively cheap.
It has also reduced the purchasing power of OPEC's revenues and increased the purchasing power of some non-dollar consumers.
OPEC oil ministers have noted that although prices are rising to record nominal levels, inflation and the dollar have softened the impact.
Some analysts say investors have been using oil as a hedge against the weaker dollar.
FUNDS
Since the Federal Reserve cut U.S. interest rates in mid-August last year and central banks pumped billions of dollars into financial markets to ease a credit crunch, oil and gold have risen.
Investment flows from pension and hedge funds into commodities including oil have boomed, as has speculative trading. At the same time, the credit crunch has brought some other markets, such as the U.S. asset-backed commercial paper market, to a virtual standstill.
Some of that money has found its way into energy and commodities, analysts say.
DEMAND
While previous price spikes have been triggered by supply disruptions, demand from top consumers the United States and China is a main driver of the current rally.
Global demand growth has slowed after a surge in 2004 but is still rising and higher prices have so far had a limited effect on economic growth.
Analysts say the world is coping with high nominal prices because, adjusted for exchange rates and inflation, they have been until recently lower than during previous price spikes and some economies have become less energy intensive.
OPEC SUPPLY RESTRAINT
The Organization of the Petroleum Exporting Countries, source of more than a third of the world's oil, started to reduce oil output in late 2006 to stem a fall in prices.
Fewer OPEC barrels entering the market helped propel the rally and consumer nations led by the International Energy Agency have urged OPEC to pump more oil.
At its meetings since December, OPEC has agreed to leave output unchanged, saying there is enough crude in the market. It next meets formally on September 9.
Few in the group believe there is much it can do to tame a market it says defies logic.
NIGERIA
Supply of crude from Nigeria, the world's eighth-largest oil exporter, has been cut since February 2006 because of militant attacks on the country's oil industry.
Oil companies and trading sources have detailed 559,000 bpd of shut Nigerian production due to militant attacks and sabotage.
IRAN
Oil consumers are concerned about supply disruption from Iran, the world's fourth-biggest exporter, which is locked in a dispute with the West over its nuclear program.
Western governments suspect Iran is using its civilian nuclear program as a cover to develop nuclear weapons. Iran denies this, saying it wants nuclear power to make electricity.
IRAQ
Iraq is struggling to get its oil industry back on its feet after decades of wars, sanctions and underinvestment.
Exports of Kirkuk crude from the country's north are stabilizing as the system recovers from technical problems that had mostly idled the pipeline since the U.S.-led invasion of Iraq in March 2003.
REFINERY BOTTLENECKS
Refiners in the United States, the world's top gas guzzler, struggled with unexpected outages which have drained inventories.
Penny stock zooms to Rs 55,000 intra-day on BSE
Ahmedabad-based KGN Industries, a ‘Z' group share that was re-listed at Rs 100 on the Bombay Stock Exchange (BSE) today after over seven years, witnessed a mammoth intra-day high of Rs 55,000 on minuscule volumes of 827 shares.
Although the BSE suspended trading in the share at 12.20 pm on Wednesday, the exchange said trading would resume at usual on Thursday.
"Further investigations are being carried out to examine the placing of orders at unrealistic prices and appropriate action, if any, will be initiated against the entities concerned," said a BSE spokesperson.
The spokesperson added that none of the trades conducted today were nullified and would be honoured. The counter, however, would attract a circuit filter of 5 per cent and would be under the trade-to-trade group.
The opening price for the stock on Thursday will be Rs 5,216.30, an average price set by BSE.
A KGN spokesperson said the company was also shocked by the price spurt. "We, too, called the exchange and asked them to look into the matter," the spokesperson said.
KGN Industries, a non-banking financial company (NBFC) before its suspension, is jointly owned by Arif Memon and Ismail Memon and is located at Navrangpura in Ahmedabad. Trading in the company's stock was suspended on 2001 after it failed to fulfil compliance issues with the exchange. Currently, the company trades in castor oil.
Although the BSE suspended trading in the share at 12.20 pm on Wednesday, the exchange said trading would resume at usual on Thursday.
"Further investigations are being carried out to examine the placing of orders at unrealistic prices and appropriate action, if any, will be initiated against the entities concerned," said a BSE spokesperson.
The spokesperson added that none of the trades conducted today were nullified and would be honoured. The counter, however, would attract a circuit filter of 5 per cent and would be under the trade-to-trade group.
The opening price for the stock on Thursday will be Rs 5,216.30, an average price set by BSE.
A KGN spokesperson said the company was also shocked by the price spurt. "We, too, called the exchange and asked them to look into the matter," the spokesperson said.
KGN Industries, a non-banking financial company (NBFC) before its suspension, is jointly owned by Arif Memon and Ismail Memon and is located at Navrangpura in Ahmedabad. Trading in the company's stock was suspended on 2001 after it failed to fulfil compliance issues with the exchange. Currently, the company trades in castor oil.
MARKET PREDICTION
GLOBAL MARKETS ARE DOWN BECAUSE OF OIL PRICES SURGES TO $135..
WHICH WILL HAVE IMPACT ON INDIAN MARKET ALSO.
MARKET WILL BE RANGE BOUND FOR COMING FEW DAYS ON THE CONCERN OF GOVT. ACTION REGARDING INFLATION CONTROL.
THERE IS NO CONFIDENCE AMONGS THE INVESTORS AFTER THE JAN FALL, AND THINGS ARE CHANGING DRAMATICALLY DUE TO THE FLOW OF BAD NEWS ALL OVER THE WORLD.
TODAY'S VIEW
LONG POSITION CAN BE BUILT FROM 5010 WITH SL 4980
SECTOR
ENERGY, TELECOM AND PHARMA-------------FOR LONG
AUTO, CONSTRUCTION-------------------------FOR SHORT
HAVE A NICE DAY
-MR SAM
WHICH WILL HAVE IMPACT ON INDIAN MARKET ALSO.
MARKET WILL BE RANGE BOUND FOR COMING FEW DAYS ON THE CONCERN OF GOVT. ACTION REGARDING INFLATION CONTROL.
THERE IS NO CONFIDENCE AMONGS THE INVESTORS AFTER THE JAN FALL, AND THINGS ARE CHANGING DRAMATICALLY DUE TO THE FLOW OF BAD NEWS ALL OVER THE WORLD.
TODAY'S VIEW
LONG POSITION CAN BE BUILT FROM 5010 WITH SL 4980
SECTOR
ENERGY, TELECOM AND PHARMA-------------FOR LONG
AUTO, CONSTRUCTION-------------------------FOR SHORT
HAVE A NICE DAY
-MR SAM
Oil Rises Above $135 After Unexpected Drop in U.S. Inventories
Crude oil rose to a record above $135 a barrel in New York on concern that supplies are inadequate after U.S. stockpiles unexpectedly dropped last week.
U.S. crude inventories fell 5.32 million barrels to 320.4 million barrels last week, the biggest drop in four months, the Energy Department said yesterday. Gasoline supplies plunged by 755,000 barrels when analysts expected an increase.
``The price was roaring before the inventory report and was going up regardless, but that gave it the extra push,'' said Rowan Menzies, head of research at Commodity Warrants Australia Ltd. in Sydney. ``I'm beginning to think that this is a serious macro event, with oil at these levels, and it's going to have some serious consequences.''
Crude oil for July delivery rose as much as $1.87, or 1.4 percent, to $135.04 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $134.85 a barrel at 9:30 a.m. Singapore time.
Oil for prompt delivery has surged 8.5 percent in the past week while futures contracts for 2016 gained $20 to $142 a barrel.
Brent crude oil for July settlement rose $1.80, or 1.4 percent, to a record $134.50 a barrel on London's ICE Futures Europe exchange at 9:29 a.m. Singapore time.
The crude-oil market is ``well supplied,'' Libya's top oil official Shokri Ghanem said yesterday, rejecting calls for the Organization of Petroleum Exporting Countries to increase production to curb prices. OPEC, which pumps more than 40 percent of the world's oil, isn't planning to meet before its next scheduled conference in September to review production, he said.
`Playing With Fire'
``OPEC is playing with fire,'' said Rick Mueller, director of oil practice at Energy Security Analysis Inc. in Wakefield, Massachusetts. ``While they may be right from a fundamental standpoint about crude supplies, at this time it will take more than words from them to bring prices down. We will need to see more gestures like the Saudis made, to lower prices.''
Saudi Oil Minister Ali al-Naimi told reporters on May 16 that the kingdom is planning a 300,000 barrel-a-day output increase, to bring June production to 9.45 million barrels a day.
``Once prices hit $150 or $200 like our friends at Goldman are saying, we are looking at $5 or $6 gasoline, which will really hurt demand and cause a recession,'' Mueller said.
Goldman analyst Arjun N. Murti said in a May 16 report that ``the possibility of $150-$200 per barrel seems increasingly likely over the next six-24 months.'' Murti first wrote of a ``super spike'' in March 2005, predicting crude may trade between $50 and $105 a barrel through 2009.
Oil Companies
U.S. oil-company executives told Congress oil prices should be between $35 and $90 a barrel. Representatives of the five largest publicly traded oil companies appeared before the Senate Judiciary Committee to testify on record energy prices. Appearing yesterday were representatives of BP Plc, ConocoPhillips, Chevron Corp., Exxon Mobil Corp and Royal Dutch Shell Plc.
The price of oil should be ``somewhere between $35 and $65 a barrel,'' John Hofmeister, president of Shell Oil Co., the Houston-based subsidiary of Royal Dutch Shell, said at the hearing yesterday. Other executives said prices should be as much as $90 a barrel.
Congress last week approved legislation to halt deliveries to the Strategic Petroleum Reserve in an effort to respond to record prices.
Airlines have been hit by higher jet fuel costs. The price of the fuel, the largest expense at many airlines, has climbed 88 percent in the past year and traded at a record $4.0592 a gallon in New York Harbor yesterday.
AMR Corp.'s American Airlines, the world's largest carrier, said it will cut ``thousands'' of jobs as it responds to high fuel prices and slowing demand.
U.S. crude inventories fell 5.32 million barrels to 320.4 million barrels last week, the biggest drop in four months, the Energy Department said yesterday. Gasoline supplies plunged by 755,000 barrels when analysts expected an increase.
``The price was roaring before the inventory report and was going up regardless, but that gave it the extra push,'' said Rowan Menzies, head of research at Commodity Warrants Australia Ltd. in Sydney. ``I'm beginning to think that this is a serious macro event, with oil at these levels, and it's going to have some serious consequences.''
Crude oil for July delivery rose as much as $1.87, or 1.4 percent, to $135.04 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $134.85 a barrel at 9:30 a.m. Singapore time.
Oil for prompt delivery has surged 8.5 percent in the past week while futures contracts for 2016 gained $20 to $142 a barrel.
Brent crude oil for July settlement rose $1.80, or 1.4 percent, to a record $134.50 a barrel on London's ICE Futures Europe exchange at 9:29 a.m. Singapore time.
The crude-oil market is ``well supplied,'' Libya's top oil official Shokri Ghanem said yesterday, rejecting calls for the Organization of Petroleum Exporting Countries to increase production to curb prices. OPEC, which pumps more than 40 percent of the world's oil, isn't planning to meet before its next scheduled conference in September to review production, he said.
`Playing With Fire'
``OPEC is playing with fire,'' said Rick Mueller, director of oil practice at Energy Security Analysis Inc. in Wakefield, Massachusetts. ``While they may be right from a fundamental standpoint about crude supplies, at this time it will take more than words from them to bring prices down. We will need to see more gestures like the Saudis made, to lower prices.''
Saudi Oil Minister Ali al-Naimi told reporters on May 16 that the kingdom is planning a 300,000 barrel-a-day output increase, to bring June production to 9.45 million barrels a day.
``Once prices hit $150 or $200 like our friends at Goldman are saying, we are looking at $5 or $6 gasoline, which will really hurt demand and cause a recession,'' Mueller said.
Goldman analyst Arjun N. Murti said in a May 16 report that ``the possibility of $150-$200 per barrel seems increasingly likely over the next six-24 months.'' Murti first wrote of a ``super spike'' in March 2005, predicting crude may trade between $50 and $105 a barrel through 2009.
Oil Companies
U.S. oil-company executives told Congress oil prices should be between $35 and $90 a barrel. Representatives of the five largest publicly traded oil companies appeared before the Senate Judiciary Committee to testify on record energy prices. Appearing yesterday were representatives of BP Plc, ConocoPhillips, Chevron Corp., Exxon Mobil Corp and Royal Dutch Shell Plc.
The price of oil should be ``somewhere between $35 and $65 a barrel,'' John Hofmeister, president of Shell Oil Co., the Houston-based subsidiary of Royal Dutch Shell, said at the hearing yesterday. Other executives said prices should be as much as $90 a barrel.
Congress last week approved legislation to halt deliveries to the Strategic Petroleum Reserve in an effort to respond to record prices.
Airlines have been hit by higher jet fuel costs. The price of the fuel, the largest expense at many airlines, has climbed 88 percent in the past year and traded at a record $4.0592 a gallon in New York Harbor yesterday.
AMR Corp.'s American Airlines, the world's largest carrier, said it will cut ``thousands'' of jobs as it responds to high fuel prices and slowing demand.
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