Financial Daily from THE HINDU group of publications
Thursday, Sep 29, 2005

News
Features
Stocks
Port Info
Archives
Google

Group Sites

Industry & Economy - Petroleum


Volatility may continue in crude oil market

Batuk Gathani

London , Sept. 28

A MAJOR debate in western business and financial circles is now in the offing amid concern about high oil prices. Although the oil price is hovering round $65 a barrel mark (against $70 last month) most analysts have breathed a sigh of relief that hurricane "Rita" along the shoreline of Texas in the US, has caused limited damage.

But analysts said oil suppliers were still tight and the markets may stay "volatile" as the winter heating season begins in October, on both sides of the Atlantic. The Europeans are forecasting a "mild" post-October but there is no real certainty.

According to current estimates, due to the recent "precautionary" oil refinery shut down along the Texan coastline, the lost output would amount to 25 million barrels. Further, oil shortage has been highlighted by damage caused by Hurricane Katrina. This shortage may not have any significant impact on the US economy but any unpredictable and immediate geographical or environment upset could have far-reaching consequences. The western scientists are already cautioning against prospects of many hurricanes and earthquakes — double the number of routine.

Obviously, there is mounting concern in the European business circles about escalating oil prices, with prospects of new finds in politically "tricky" and economically unstable world regions — West and North Africa and parts of west Asian region. Hence, there is an overall quest — highlighted by IMF — to work on strategies for uncertain times.

Other day leaders of Group Seven (world's most prosperous economies) warned against artificial efforts to shield consumers from higher energy costs and stated that this strategy "could backfire".

The leading economic powers of Asia — China, India, Indonesia and Malaysia — have cushioned the effect of rising oil prices to mitigate the effect of rising oil prices on consumers.

In Indonesia, the subsidies cost $1.4 billion and in Malaysia about $1.45 billion. Although India has allowed the retail prices of oil and petrol to "gradually rise" the price-caps have hit the State-run refineries and trading losses have amounted to $3.3 billion in the past 12 months.

China has been more "pragmatic" and has tried to sell surplus refined oil in overseas markets to take advantage of high oil prices in the global market place. This strategy has triggered oil shortage in domestic market place in China but according to western observers the strategy has "political" implications. India imports two thirds of its oil requirements while China only imports about 40 per cent of its energy needs.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page



Share Infoline Tata Safari Dicor

Stories in this Section
New `low' forecast as monsoon exits northern rim


Solar photo-voltaic project in Bengal
Kerala Govt forms task forces to implement Kalam's plan
Coca-Cola can't tap ground water, says Jayalalithaa
Metropolis ties up with UAE hospital for lab outsourcing
Survey calls for timely steps to promote blood donation
Left says vote on Iran will have severe implications
LNG deal still in force: Iran
Volatility may continue in crude oil market
Bengal to set up polymer parks
Nuclear power plant to come up in Ratnagiri district
APERC outlines co-generation norms
Orissa clears steel projects
Zee, Malaysia's Astro team up to launch customised Hindi channel
IIM-A students get attractive placements
New Zealand woos Indian students with job prospects
Minister for zero duty VAT on perishable items
Costly glitter
AP proposes permanent housing in flood-hit areas
Kerala chamber gets ISO certification
PM concern over science grads not finding gainful jobs
Kasturirangan gets Asia-Pacific SatCom award
Conference on mining industry begins in Goa
Sania joins film stars to help out ailing kids
`Be innovative on farm credit' — As rural income rises, so does credit need, says Rakesh Mohan
ITC seeks Rs 200-cr carbon credits
Nabard sanctions Rs 51.87 cr to Kerala
Goa offers single window clearance for IT projects
Strike may disrupt air travel, banking — Rlys, BSNL, MTNL workers to stay away from stir
Smoke-screen
BHPV unions to join strike
In Hyderabad today
Plan for EET-based savings taxation system by Oct 31
Jute exports on the upswing
Soyameal exports: Trade on wait & watch mode
1.5 lakh tonnes shipments contracted; China buys 50,000 t



The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2005, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line