Crude Oil Final

CRUDE OIL: FACTORS AFFECTING CRUDE OIL PRICES Presented by: Shweta Garg Sanchit Rohatgi Farida Osman Zeeshan Ali Vinay Agarwal Sagun Bajaj

Introduction One of the most basic global commodities Price fluctuation impacts businesses & Industries Crude oil prices rose to record147$/Barrel level Volatility in Stock Markets across the world Led to the rise in inflation level globally

Factors affecting Crude Prices Crude Oil

Demand

Weather

Iraq postwar insurgenc y

OPEC decisions Venezuela

Natural Causes 3

Crude oil prices, having recently exceeded $140 per barrel, are projected to decline slowly over the forecast. 150 Crude prices often decline just prior to winter 140 130 120 110 100 (Dollar 90 80 s per 70 60 Barrel) 50 But did not this 40 winter 30 20 10 0 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08

Long-Term Energy Outlook

Forecast Jan-09

Jan-10

Multiple and hard-to-predict factors drive oil prices

Non-OPEC Supply Growth

China’s Oil Demand

Inventory

Economic Growth Iran

Value of U.S. Dollar

Dollar-based economies have experienced higher oil prices than those with other currencies. 120 $95.39

100 $ per barrel

80

(Dollars/Euros 60 per Barrel)

€64.68 € per barrel

40 20 0 Jan-02

hort-Term Energy Outlook

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Organization Of The Petroleum Exporting Countries

Establishment -10 Sep,1960 in Baghdad Headquarters Vienna, Austria Official language- English Secretary General -Abdallah Salem el-Badri,Libya since January 1, 2007) Total area-13,753,061 km²  Expected population -619157014

MEMBERS OF OPEC

Algeria, Angola, Ecuador, Iran, Iraq, Indonesia, Kuwait, Nigeria, Libya, Qatar, Saudi Arabia, United Arab Emirates, Venezuela.

FUNCTIONS  It Coordinates the oil production policies  Helps oil producers to achieve a reasonable rate Try to stabilize the market  Maintaining stability Apart from this, the member countries also in oil production

meet from time to time to discuss upon expected demand for petroleum in countries

Crude Oil: Impact on Indian Economy Crude & byproducts contributes 14.2% of WPI of India Trading of crude oil is based on Singapore mercantile exchange Massive losses incurred by Oil companies because of Government subsidies. Rise in ATF, led to the booming aviation industry plunge southwards Huge decline in sales of automobile industry

Crude Oil: Skyrocketing Inflationary Index Led to soaring WPI commodity prices driving inflation alarmingly. Inflation rose to above 13% from a level of 4.23% in February 2008 High input cost for manufacturing industry : the largest GDP contributor

Why do the analysts think that prices will decline over the next ten years? Production increases are expected in both OPEC and non-OPEC countries  

Nigeria, Angola, and Saudi Arabia Azerbaijan, Brazil, Kazakhstan, and U.S. Gulf of Mexico

The high oil price environment of the past several years has provided sufficient incentives to spur increased growth in unconventional supplies   

Canadian oil sands Brazilian and U.S. bio-fuels Qatar gas-to-liquids

Significant projected growth in global natural gas

Market balance should loosen as demand growth slows and non-OPEC supply growth increases. World Oil Consumption Growth 1.6 1.5 1.4

Non-OPEC Production Growth 1.6 1.6 1.5 1.4 1.4

1.4

1.2 1.1

1.1

1.4 1.2

0.9 Million Barrels per Day

0.8

0.3

0.2 0.1 0.0

3Q2007 4Q2007 1Q2008 2Q2008 3Q2008 2008Q4

Long-Term Energy Outlook

2009Q1

2009Q2

2009Q3

2009Q4

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