Oil tumbles to $45 a barrel, bringing cheer to consumers for now

Discussion in 'Economy & Infrastructure' started by Ray, Jan 14, 2015.

  1. Ray

    Ray The Chairman Defence Professionals Moderator

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    Can someone explain the impact on:

    * Indian economy.
    * World Economy.

    And how India can capitalise on this.
     
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  3. ladder

    ladder Senior Member Senior Member

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    I think oil is purchased through long term contracts, which helps shielding from immediate rise in oil prices. Similarly the contract might have provisions to protect the seller from immediate effect of lowering of price. Although I don't have much knowledge, the price contracted as long term contract is not absolutely fixed but an index with some cushioning.

    So, it would be prudent to think that some effect will be felt. As oil is an imported community, therefore oil price easing will definitely have positive effect on our economy.

    The taxes are collected on petroleum are as a percentage of it's value, so if prices decreases the absolute value of taxes collected will decrease, if consumption is kept constant. Thus govt. would have to take a call on that.

    Un-doubtfully some price benefit will be passed on to customer, like non subsidized LPG prices have already being cut. Private owner of vehicles will have some benefit. But, public transporters like always will reduce fare in such a way that has no easing effect on the customer's pocket.

    It would have been good if govt. fast-tracked the proposed strategic oil reserves ( apart from those constructed ) to fill them up with cheap oil. Although we had in principle agreement with couple of oil producers who had agreed to fill them up for free of cost, and use them as reservoir for further trade with different countries. India would have reserved the right of first refusal.
     
    Last edited: Jan 14, 2015
  4. Dark Sorrow

    Dark Sorrow Respected Member Senior Member

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    I have some unconfirmed reports that the put price for oil is $20 per barrel (meaning we can expect oil rice to fall).
    Looks like Americans are leaving no stones unturned to screw Russian.
     
  5. rock127

    rock127 Maulana Rockullah Senior Member

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    Russian Economy would be in trouble as they are facing the heat already.
     
  6. sorcerer

    sorcerer Senior Member Senior Member

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    Not just the RUssians...The Saudi terror fundig house too.
     
  7. sorcerer

    sorcerer Senior Member Senior Member

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    Role of Wahhabi Saudi Arabia in Financing Global Jihad: A Case Study in Financial Terrorism
    Role of Wahhabi Saudi Arabia in Financing Global Jihad: A Case Study in Financial Terrorism - Indian Exponent


     
  8. ganesh177

    ganesh177 Regular Member

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    Last two falls in the crude oil have not been transferred to the price of indian petrol and diesel. Its still the same.
    Why is modi govt reluctant ? I thought we had free floating prices now.
     
  9. ezsasa

    ezsasa Senior Member Senior Member

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    1) to bring down fiscal deficit to the extent possible using the revenues.
    2) considering that this price reduction is a artificial phenomenon, to avoid confusion by constant fluctuation of prices. Ex: when prices go down, corporates who are dependant on oil prices might declare tentative profits based on current oil prices. Prices going up unexpectedly causes market volatility and there by hits market sentiment, bad for the market.
     
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  10. Nicky G

    Nicky G Senior Member Senior Member

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    For India, a $50 B annual saving and great chance to control fiscal deficit and spend more where required and improve GDP. :thumb:

    Crude price slump a boon for India: RBI

    How falling crude prices impact India's GDP, inflation

    Modi and consequently India do have good luck at this time, since India is such a major importer of oil:

    Fall in crude oil prices is perfect script that God has written for Modi Govt: Analysts
     
    Last edited: Jan 14, 2015
  11. Sambha ka Boss

    Sambha ka Boss Regular Member

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    The main reason is Shale oil boom as the extracting Shale Oil is getting cheaper. Moreover, there is unlimited Shale oil reserve across the world. So, the oil producing countries need to diversify their economy to tackle future problems.
     
  12. dastan

    dastan Regular Member

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    This could help govt achieve fiscal targets and RBI might finally revise rates :D
     
  13. dastan

    dastan Regular Member

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    Well looks like rates are cut finally, nifty hits all time high!
     
  14. Simple_Guy

    Simple_Guy Regular Member

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  15. Redhawk

    Redhawk Regular Member

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    Sheikhs v shale: The economics of oil have changed.
     
    Last edited: Jan 20, 2015
  16. reetasharma

    reetasharma New Member

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    Shale should control the oil prices the sheikhs are really increasing the prices when they feel like also mild east is quite unstable.
     
  17. sorcerer

    sorcerer Senior Member Senior Member

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    Oil falls again as IMF cuts forecast; Iran hints at $25 oil
    (Reuters) - Oil fell as much as 5 percent on Tuesday after the International Monetary Fund cut its 2015 global economic forecast and key producer Iran hinted prices could drop to $25 a barrel without supportive OPEC action.

    Genscape, an analytics firm that monitors U.S. oil stocks, reported a 2.6 million-barrel build last week in Cushing, Oklahoma, the delivery point for the U.S. crude futures contract, adding to the market's bearish sentiment, traders said.

    Trade group American Petroleum Institute will issue its data on U.S. crude inventories for last week on Wednesday while the government's Energy Information Administration will release its stockpile tally on Thursday, both delayed a day by a holiday on Monday.

    Benchmark Brent crude LCOc1 closed down 85 cents, or 1.8 percent, at $47.99 a barrel. It earlier touched a session low of $47.78.

    U.S. crude CLc1 settled down $2.30, or 4.7 percent, at $46.39 a barrel, after tumbling to an intraday bottom of $45.89. Traders said activity in U.S. crude was heightened somewhat by the expiry of the February futures contract CLG5 as the front-month.

    The premium for Brent over U.S. crude futures CL-LCO1=R widened after Genscape's reported build in Cushing stocks. The arbitrage was at around $1.50 a barrel when U.S. crude settled, after reaching $1.66 earlier.

    Oil prices are hovering near six-year lows after a selloff on worries of a glut caused primarily by unexpectedly high production of U.S. shale crude.

    An expected slide in the U.S. oil rig count in the first quarter compared with the fourth quarter of last year failed to boost sentiment on Tuesday as traders and investors remain focused on concerns of oil oversupply.

    "Because we have record oil production now, the falling rig numbers are not creating an immediate positive impact in bolstering prices," said Phil Flynn, analyst at Price Futures Group in Chicago. "In fact, they may be creating just the opposite impact; reminding us how poor demand is."

    U.S. oil services firm Baker Hughes Inc (BHI.N) said in a conference call on Tuesday that the U.S. average rig count was expected to decline 15 percent in the first quarter from the previous quarter, and it expected to lay off some 7,000 staff.

    Earlier data from Baker Hughes showed the number of rigs drilling for oil in the United States fell by 55 last week, the second-sharpest weekly drop in 24 years.

    The IMF, in its latest World Economic Outlook report, reduced its global economic forecast by 0.3 percentage points for this year and next, projecting a 3.5 percent growth in 2015 and 3.7 percent for 2016.

    Iran's Oil Minister Bijan Zanganeh said Tehran saw no signs of a shift within OPEC towards action to support oil prices, and that the industry could ride out a further slump toward $25.

    Oil falls again as IMF cuts forecast; Iran hints at $25 oil | Reuters
     
  18. sob

    sob Moderator Moderator

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    @ladder, Central Govt. levies taxes and duties on crude and finished oil products on Ad valorem basis, i.e the amount is fixed and not in terms of percentage. so whether the prices rise or fall the revenue remains static. It is only dependent on volume. For the state governments it is opposite. Just this week Telengana has raised VT on petrol by Rs.2 so now the VAT rate is 25%+Rs2.

    Other State Governments are also likely to follow suit, as they are fast losing a huge chunk of revenue.
     
    Last edited by a moderator: May 10, 2015
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  19. warrior monk

    warrior monk Regular Member

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    The only sad thing in this scenario is we have only at 37,400,000 barrels that is around 2 weeks of oil for strategic reserves which is very low for a super sized country like India. We should increase it to 200 million barrels atleast
    US has 1 billion barrels that is 27 times of Indias reserves . If we had these capacity we could have brought the cheap oil at 45$ and would have used it when we need it or when oil shoot up.
    The govt of India is planning to increase the strategic reserves to 132 million barrel which is crap they should increase it up to 200 million barrel .
     
  20. pmaitra

    pmaitra Moderator Moderator

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    Oil Surges 8 Percent as US Rig Count Plunges

    Poised for a bounce many thought was overdue, short traders raced to cover their positions.


    Barani Krishnan [SOURCE]

     

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