How market works and who influence it

1. CRUDE OIL MARKET

2.  Oil is lifeblood of the industrialised nations.
 The world economy has been developing with oil as its lifeblood for over a hundred
years. Oil is directly responsible for about 2.5% of world GDP , but accounts for 1/3rd of
humanity's primary energy supply.
 Decline in crude oil prices helps the government manage its finances better as it
translates into lower subsidies on petroleum products (LPG and kerosene), thereby
resulting in lower fiscal deficit.
 It affects us all directly as petrol and diesel prices rise. As a result, inflation rises.. Every
$10 per barrel fall in crude oil price helps reduce retail inflation by 0.2% and
wholesale price inflation by 0.5%, according to a Moneycontrol report.
Why Crude Oil Market Is Important??

3. Oil Prices And Inflation
Low Oil Prices Drag Down Inflation Expectation

5. There are three benchmark crudes in the world.
 Dubai is the benchmark for crude in the Middle East,
 Brent crude is the North Sea crude marker,
 West Texas Intermediate (WTI) is the marker crude for Western
Hemisphere crude oils.
(Brent is usually used as the benchmark price and other oil prices are
decided relative to it. The majority of world’s trading happens on Brent
Crude one hears about daily. When you hear a crude oil price of $100
per barrel, or $70 per barrel, this is the crude that is being referred to.)

6. DEMANDDEMAND SUPPLY
The different grades of crude oil are traded in a
special type of market called the –
Futures Exchange.
The end buyers and sellers both have a price in
mind and depending on their urgency and needs
will be willing to take a particular price, delivery
set at a specified time in the future,
Depending on the situations of that time, the price
would vary.
These type of future contract is traded on the New
York Mercantile Exchange (NYMEX) Futures
Market.

7. DEMAND SUPPLY
Who is setting the benchmark crude price??
Supply and demand obviously dictate how the
price will move, but this market often moves
on emotion.
The old adage, “A rising tide lifts all boats”
applies.
A problem in one part of the world affects
prices throughout, consequently oil producers
and refiners may benefit during periods of
supply shortages.
 News on new supply
 Changes in consumption patterns
 Terrorist attacks and disturbance.
 Natural disaster

8. Non-OPEC Nations
America, Russia, China, South
Africa, Canada, Brazil and others
OPEC Nations
Algeria, Angola, Ecuador, Iran, Iraq,
Kuwait, Libya, Nigeria, Qatar, Saudi
Arabia, United Arab Emirates and
Venezuela.
The Organization of Petroleum Exporting
Countries (OPEC) is a group consisting of
12 of the world's major oil-exporting
nations.

9.  For decades, OPEC’s influence on oil prices was unparalleled.
 But the cartel's immense influence has been dealt a huge blow by
the dramatic boom in US, Russia, China
 Saudi Arabia and OPEC are no longer in control
 The emergence of US shale as a key global player that can pump
even during low oil prices means OPEC can no longer "manipulate
prices,“
 "The shale revolution has changed a lot of things."
Simple, the nations involved all want oil to go
higher, but they don't want to cut back production
and then risk losing market share.

11. Where We Stand
 India is the 3rd largest consumer of oil in the world with more than 4 million
barrels per day! The price of oil has a significant impact on the economy.
 India has a total refining capacity of 223 million tonnes of crude oil.
 That in the present scenario only 38 million tonnes of crude oil from domestic
production is available for refining in Indian refineries.
 The balance (84.9 per cent) crude oil is required to be imported to meet the
domestic refinery capacity.

12. Rank Exporter 2016 Refined Oil Exports % World Total
1. United States US$64.1 billion 12.7%
2. Russia $46 billion 9.1%
3. Netherlands $37.4 billion 7.4%
4. Singapore $36.1 billion 7.2%
5. India $27 billion 5.3%
6. South Korea $25.5 billion 5%
7. Saudi Arabia $23.7 billion 4.7%
8. Belgium $20 billion 4%
9. China $19.4 billion 3.8%
10. United Arab Emirates $15.2 billion 3%