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MCX CRUDE OIL

Prepared by:

Jay Modi B37

Harsh Patel B46

Jigar Prajapati B50

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INTRODUCTION

Mixture of liquid hydrocarbons

Considered as BlackGold

Almost all industries are dependent on oil

Accounts for 40 % of worlds primary energyconsumption

Leader in the Indian energy commoditiesexchange

Prices are highly volatile

U.S ,China, Japan are largest oil consumers

India is one of the top 10 consumers of Crude oil

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OPEC

Founded in Baghdad, Iraq in 1960

Organization of 11 developing countries

Emerged as a single largest price influencing

factorOPEC controls almost 40 % of the world's

crude oil

It accounts for about 75 % of the world'sproven oil reserves

Its exports represent 55 % of the oil tradedinternationally

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TYPESOF CRUDE OIL

West Texas

Intermediate

Brent Crude Oil Sour Crude Oil

(Middle East)

Density(in APIGravity)

39.6 % 38-39 % 31-37 %

Sulphar 0.24 % 0.4 % or less 2.05 % or less

Quality High Medium Low

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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

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CONTRACT SPECIFICATIONS(MCX)

Symbol CRUDEOIL

Contract listing Contracts available for all 12 calendarmonths in a year

Trading Unit/Contract size 100 Barrels

Quoted size Rupees/barrelMaximum order size 10000 barrels

Tick size 1 rupee

Daily Price Band 4 %

Initial Span Margin 5 %

Maximum Allowable open Position Individual:480000 barrelsMembers:2400000 barrels or 15 %

Trading Period Monday-Saturday

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

Crude Oil Price

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FACTORAFFECTINGCRUDEOILPRICE

Production

Supply

Global oil Inventories

Financial Market Demand

Non OECD Demand

Spot market

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SUBSIDY

Indias subsidy bill zoomed to Rs 2.16 trillion or2.5% 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 sameat $115

Next year government has reduced the budgetedamount for oil subsidy to Rs43580 crore

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INFLATION

Crude oil price move up or down, inflationfollows in the same direction

Crude oil price increases, its directly affects

the rate of inflation. When the pricescrossed $100/barrel in 2008, inflation alsowent up to 12.27% which was highest forIndia in previous two decades

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STEPSTAKENBYTHEGOVT.AND RBI

What Govt. did ?

1. Provided huge amount of subsidies to oilcompanies to keep them solvent

2. This increased domestic prices of diesel and petrol3. 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)

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WHEN OILPRICES MOVES UP :

1. Inflation increases

2. Govt. spending on subsidy increases

3. Foreign currency reserves reduce4. Our export becomes weaker

5. GDP is affected negatively

6. Share market crumbles

7. Investment decreases

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INDIAS OIL IMPORTSPERCOUNTRY

Iran, 10.51%

Iraq, 13.98%

Kuwait, 10.28%

Oman, 1.51%

Qatar, 3.76%

S Arabia, 18.85%

UAE, 9.15%

Yemen, 0.75%

brazil, 2.20%

Colombia,0.52%

Equador,0.17%

Mexico,1.33%

Venezuela, 5.53%

Australia,

0.38%

Brunei, 0.64%

Malaysia, 1.36%Algeria, 1.22%

Angola, 5.24%

Cameroon, 0.29% Congo, 0.32%

Egypt, 1.65%

Guinea, 0.52%

Gabon,0.09% Ivory Cost,

0.09%

Libya, 0.09%

Nigeria, 8.19%

Sudan, 0.41%

Azerbaijan, 0.61%Norway, 0.38%

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HUBBERTSPEAK

Hubbert assumed that after fossil fuel reserves arediscovered, production at first increasesapproximately exponentially, as more extractioncommences and more efficient facilities are

installedAt some point, a peak output is reached, and

production begins declining until it approximates anexponential decline

His theory states that the rate ofpetroleum production tends to follow a bell-shapedcurve. It is one of the primary theories on peak oil

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PREVAILING DUTIES & LEVIESON 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

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THANK YOU