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April 5, 2016
THE OIL CONUNDRUM
The oil industry, with its history of booms and busts, is in its deepest downturn since the 1990s, if not earlier. At $40/bbl,
$40/bbl a
barrel of crude oil is roughly 70% cheaper than during its recent peak in June 2014 (all time peak in 2008) (see chart below).
below)
The dramatic fall of the oil price over the past six months or so seems to have taken almost everyone by surprise. Earnings are
a
down
own for companies that made record profits in recent years leading them to decommission more than two-thirds
two
of their rigs
and sharply cut investment in E&P. Scores of companies have filed for bankruptcy (Sabine
Sabine Oil & Gas, Milagro Oil & Gas,
Samson Resources and Swift Energy, to name a few) and an estimated 250,000 oil workers have lost their jobs.
jobs
Prices recovered a few times last year, but the cost of a barrel of oil has already sunk this year to levels not seen since 2003
as an oil glut has taken hold. Also contributing to the glut was Iran’s return to the international oil market after sanctions
were lifted against the country under an international agreement with major world powers to restrict its nuclear work that
took effect in July 2015. The last time the price fell as sharply was in 2008, when the global economy plunged into recession
following the onset of the financial crisis. Yet the economic environment now is markedly different. Global growth may be
uncertain and real risks abound but the IMF forecasts th
that global GDP growth will be 3.4% in 2016 and that annual demand
for oil will rise steadily, if at a somewhat slower pace than pre
pre-crisis.
The most recent fall in prices, and its underlying drivers, is more reminiscent of events in 1985 and 1998. On all such
occasions, longer term shifts in supply were at the root of the sharp price falls, and although each episode had its own
detailed narrative, there are sufficient similarities to suggest repeated cyclical characteristics.
Source: The New York Times
In terms of oil supply, the response of investme
investment
nt and that of production must be distinguished both in the short and the long
term. The current oil prices are certainly sufficient to elicit a dramatic retrenchment in investment. The sharp fall of the oil
price has already forced the oil majors to cut b
back
ack dramatically on capital expenditure and such falls can be expected to
persist over the next couple of years. The cutback in capital spending has affected exploration drilling. Statoil ASA, Norway’s
state-controlled energy producer could face a cut of up to 40% in capex over the three
three-year
year period from 2017 through 2019.
2019 A
major U.S. natural gas producer, CONSOL Energy Inc. has said it will cut capex by 41% year over year in 2016 and now
expects to spend $205 million to $325 million on oil and gas drilling this year. Exxon Mobil Corp, the
t world’s largest privately
held energy company, promised a steep cut in capex this year, aiming at 25% reduction to $23.2 bn for 2016 from $31 bn spent
in 2015.
The sharp fall in the number of rigs drilling
rilling for oil in the US continues to make the headlines, though much of the decline has
come from lower-yielding rigs. US domestic production has so far held up well and US commercial crude stocks have risen to
historical highs since the start of the year.
r. The cutback in supply will be sure to come and the US Energy Information
Administration expects US crude production to fall in the year but in the short term marginal costs of production
prod
can be
downsized rapidly as oil companies renegotiate prices with oil-service providers.
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The net effect of cheaper oil is expected to be positive on global grow
growth.
th. According to The Economist,
Economist a $40/bbl price cut could
shift some $1.3 trillion from producers to consumers through di
direct savings at the petrol pump leaving households with more
resources for discretionary spending in other parts of the economy, including goods and services.
Most OPEC countries have little
ttle room to manoeuvre because of their reliance on oil revenues to balance national budgets.
These include Iran, Venezuela, Iraq and Nigeria.
igeria. Unlike the Gulf States, they have no large foreign exchange reserves to fall
back on to sustain state expenditure and the oil price collapse has been exacerbated by existing problems such as sanctions,
political instability, security and corruption.
Crude oil production (in April 2016) from seven major US shale plays is expected to fall 106,000 b/d to 4.87 million b/d,
according to the US Energy Information Administration’s latest Drilling Productivity Report (DPR). Oil output at the Eagle
Ford shale play in South Texas is forecast to see the biggest decline, down 58,000 barrels a day in April, as the Bakken shale
shal
play, which stretches from Canada into North Dakota and Montana, is expected to see output fall by 28,000 barrels a day.
day
Source: International Energy Agency
Source: Tititudorancea.com
What’s behind the drop??
The crude oil prices have declined mainly due to the strong U.S. dollar, OPEC, high production,
production declining demand and the
Iran nuclear deal. Prices have been cut to half in less than a year, reaching lows that people have not seen since the last global
recession. Prices have recovered periodically in 2015, but many oil executives believe it will be years before oil returns to $100
per barrel.
Strong US Dollar
The strong U.S. dollar has been the main driver for the price decline of crude oil
oil. This puts the market under a lot of pressure
because when thee value of the dollar is strong the value of commodities falls since global
lobal commodity prices are usually priced
in dollar. For example, the surge in the dollar since the second half of 2014 caused a sharp fall in the leading commodity
indexes.
Organization of the Petroleum Exporting Countries (OPEC)
Another leading factor in the sharp price drop of crude oil is that OPEC, a cartel of oil producers, is unwilling to stabilize
stabiliz the
oil markets. Prices of OPEC’s benchmark crude oil have fallen over 50%
0% since the organization decided against cutting
production at a 2014 meeting in Vienna.
Of the participating countries, Iran, Venezuela and Algeria wanted to cut production to firm up prices. Saudi Arabia, the
United Arab Emirates and other Gulf allies refuse
refused to do so. Iraq sits alone as the only OPEC country to not only maintain
supply but also increase it. If OPEC does
oes not cut production, the result is a further oversupply of oil, placing downward
pressure on crude oil prices in the medium term
term.
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Source: International Energy agency
Source: US Energy Information Administration, Thomas Reuters
Oversupply of Crude Oil
Crude futures declined in late 2015 given that the global oversupply is increasing oil stockpiles. U.S. crude oil production
averaged an estimated
timated 9.4 million barrels per day (b/d) in 2015, and it is forecast to average 8.7 million b/d in 2016 and 8.2
million b/d in 2017. Oil inventories have risen more than expected. At almost 500 million barrels, U.S. crude oil inventories
are at the highestt level in at least the last 80 years, causing a decline in prices (see chart below).
Declining Demand
While supply is increasing, demand for crude oil is decreasing. The economies of Europe and developing countries are
weakening, and at the same time, automobiles are becoming more efficient, which has caused the demand for fuel to lag.
China's devaluation of its currency suggests its economy may be worse off than expected. With China being the world's
largest oil importer (6.3 mb/d as on Jan 16),, this iis a huge hit to global demand.
Iran Nuclear Deal
The Iran nuclear deal is a preliminary framework agreement reached between Iran and a group of world powers. The
framework seeks to redesign, convert and reduce Iran's nuclear facilities. The U.S. nuclear deal with Iran allows more
Iranian oil exports. The deal removes Western sanctions against Iran, and investors fear it will add to the world's oversupply
of oil. Markets have already reacted to this news by decreasing the price of crude oil.
Source: International Energy Agency
Source: E IA and Labyrinth Consulting Services, Inc.
Source: Oilprice.com
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Global impact of falling crude o
oil prices
The fall in oil prices has been one of the most important macro
macro-economic
economic events recently. While it has certainly meant lower
fuel bills for consumers, it has also drastically reduced the revenues of oil
oil-exporting
exporting countries. The questions that arisearise Does
the drop in price have far-reaching effects which may lead to geopolitical tensions in the world? Is the power to decide the
pricing shifting from the hands of the OPEC nations, for the first time in decades? Are the low prices laying a base for a much
larger uptrend in the future?
Saudi Arabia- The Kingdom of Saudi Arabia pr
produces a whopping 13.1% of all the oil produced daily in the entire world
(9.693 mb/d).. Its crown as oil champion is however unsecure as the government is heavily dependent on oil revenues with
almost 90% of its revenues coming from oil. The recent fall in oil prices is likely to result in a higher government deficit and
may result in lower government spending. This is bound to have a significant impact on job creation,
creat
as most of the private
sector jobs are based on government contracts. The kingdom also has vast social
social-sector
sector spending commitments that it increased
after the Arab Spring ($229.3 billion).
Though in the short term the reduction in revenues due to low oil prices won't be an issue due to the fact that the Saudis can
dip into their US $700 billion sovereign wealth fund for revenues, in the longer term Saudi Arabia needs around US $104 billion
to balance its budget. During the global boom, Saudi Arabia’s GDP more than quadrupled from $183 billion in 2001 to $753
billion in 2015. The plunge in oil prices since late 2014 has led to the rise in Saudi’s current account deficit to $11.3
$1
billion in the
third quarter of 2015. But even after the drastic fall in oil prices, the Saudis haven’t cut their oil production in order to push oil
prices upward. The reasons for not doing so are claimed to be entirely political in nature, as the lower
low prices are likely to
hurt shale oil production in the US which would be a long term positive for the Saudis.
Source: US EIA, Thomas Reuters
Source: US EIA
Source: IMF
United States- Though the US seems to be a huge beneficiary of lower oil prices, deeper analysis shows the situation to be a bit
more complex. Along with being the second
nd largest importer of oil, it sits at second place with production equal to 12.2%
12
of the
total (9.02 mb/d).. There has been a significant increase in US oil p
production over the past 5 years mainly due to the use of newer
technologies such as fracking. Whilee lower oil prices will benefit consumers in terms of increased savings that are likely to
increase consumption and result in an uptick in the GDP, they are also likely to hurt U.S. shale oil
o producers in the long termwho according to estimates need oil prices to b
be above US $60 to breakeven which in turn would lead to lower associated
investment. Lower oil prices will also negatively affect the profitability of US energy companies such as Exxon, Chevron etc.
Russia- Russia remains a massive producer of oil with 14.1% of the total production (10.59 mb/d).
mb/d) With oil prices tanking, the
Russian economy has been most adversely affected. Its oil revenues, which constitute more than half of its budget revenues and
approximately 70% of its export revenues, have dropped significantly, with an estimated
d US $2 billion loss with fall in oil price
by $1. Russia's currency has as a result collapsed, which forced its central bank to raise interest rates to 17% last year and sell its
foreign currency reserves in order to stem the run on the Ruble.
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The ensuing chaos has led to a downgrade of its sovereign bonds and resulted in capital flight, all of which is likely to result in a
contraction in the GDP. The Russians need oil prices to be above US $105 a barrel to balance the budget; market conditions in
which the prices fall below this will either cause the government to run deficits or force it to cut down on its other development
devel
programs.
Source: Bloomberg
Source: Trading Economics
Source: Toptenscentral, CD Equisearch
China- An unheralded but major producer, China has steadily increased production over the last 50 years and currently sits at
5.3% of global output. The
he benefits of falling oil prices to China have not been as extensive as principally expected due to the
government raising taxes on oil products. There has also been a slowdown in the real estate which has increased the household
savings. One
ne of the reasons for lower oil prices is the lower demand from China; where fears of deflation led the central bank to
reduce the amount of reserves that banks are required to hold. The government has also utilized this recent fall in oil prices to
increase its strategic oil reserves.
serves. Thus, the lower prices will certainly improve China’s current account surplus and lower costs
for businesses but are not likely to have much of an impact on the Chinese economy due to other deeper structural problems
probl
in
the economy- fall in exports, cut in growth rate etc.
Iran- Already reeling under heavy economic sanctions imposed by w
western nations which reduced its oil exports by more than
half, Iran now has to face the double whammy of lower oil prices. Oil exports make up 80% of Iran's total export earnings and
50% to 60% of its government revenue,, so the recent fall has already led to a budget deficit to 2.58% of the country’s GDP in 2015
(1% in 2014). Iran’s output has averaged 2.8m barrels a day from 3.6m b/d in 2011 as a result of the western sanctions aimed at
reining in the country’s nuclear activities. Iranian officials expect to increase output by 0.5 mb/d after the
t lifting of restrictions
and further 0.5 mb/d in coming months. Though in the short term the impact on Iran's economy will be cushioned by the
government's use of a fund that was set up to counter lower oil prices, in the longer run it is estimated that Iran needs oil prices
to be above US $131 to balance its budget. The nuclear deal will be positive for Iran’s economy but it would also signal that Iran's
oil would be added to the present supply of oil on the market, which may put further downward pressure
pressur on oil prices.
Source: Deutsche Bank and IMF
Source: EIA & Labyrinth Consulting Services, Inc
Source: US Energy Information Administration
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Japan- The fall in oil prices should lead to a significant improvement in Japan’s trad
tradee deficit, given the fact that it imports most
of the oil it consumes. While the price dip should significantly raise corporate prof
profits
its and boost household income, it has been
offset to some extent by the depreciation of the yen relative to the dollar.
ollar. Further, lower oil prices are
a likely to decrease
inflation which is likely to make the Bank of Japan’s aim of 2% inflat
inflation
ion more difficult to achieve. The power sector, on the
other hand, is likely to benefit since it has been using oil power plants to make up for the lost capacity due to the closure of
nuclear reactors and their inability to pass on the higher costs to consumers.
Source: Rystad Energy, CNN
Source: Rystad Energy, CNN
How Oil Price affects India?
Current account balances:: India is one of the largest importers of oil in the world. It imports nearly 80% of its total oil needs.
Since this accounts for one third of its total imports, the price of oil affects India a lot. A fall in the price of oil would drive
down the value of its imports. This helps narrow India's current account deficit - the amount India owes to the world in foreign
currency. A fall in the oil prices by $10 per barrel will redu
reduce
ce the current account deficit by $9.2 billion. This amounts to nearly
0.43% of the GDP.
Rupee Exchange Rate: The demand of rupee
upee in the currency market affects its value and so it depends on the current account
deficit to a great extent. As a result of this deficit, India has to sell rupees and buy dollars in order to pay the bills. The
T
transaction leads to fall in the value of rupee. The falling oil prices ultimately benefits the rupee. However, the downside is that
the dollar strengthens every time the value of oil falls. This negates any benefits from a fall in current account deficit.
Petroleum Producers: Though the fall in the oil prices may prove beneficial to India, the exporters of petroleum producers in
the country are directly affected. India being the sixth largest exporter of petroleum products helps it to earn $ 60 billion
annually. Any fall in oil prices negatively impacts exports. At a time when India is running a trade deficit with high imports
and low exports, any fall in exports is bad news. Moreover, a lot of India's trade partners and buyers of its exports are net oil
exporters. A fall in oil price may impact their economy and hamper demand for Indian products. This
Thi would indirectly affect
Indian companies.
Fiscal deficit:: The price of fuel is fixed by the government at subsidized rates. It incurs loss called under recoveries by
compensating those companies who
o sell fuel products at lower rates. This loss adds to the government expenditure and leads
to rise in fiscal deficit. A fall in oil prices reduces company’s losses, oil subsidies and thus helps narrow fiscal deficit. The fall in
prices will likely have less effect on the fiscal deficit after the deregulation of diesel. Moreover, the government still has to pay
for previous under-recoveries.
recoveries. Any benefit from the fall will be offset by payments for the past under-recoveries.
under
Inflation: Oil price affects the entire economy, especially because of its use in transportation of goods and services. A rise in oil
price leads to an increase in prices of all goods and service and also affects the diesel and petrol prices as a result
re
of which
inflation rises. A high inflation is bad for an economy as it affects companies directly because of a rise in input costs and
indirectly through a fall in consumer demand. This is the reason why the fall in global crude oil prices comes as a boon to
India. Every $10 per barrel fall in crude oil price helps reduce retail inflation by 0.2% and wholesale price inflation by 0.5%.
0.
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Impact on Oil Producers
The most obvious impact of the oil price collapse on company accounts is the increased risk of impairment of assets. Lower oil
price forecasts mean that producers should expect lower future profits from an asset. Subsequently, this reduces the present
value of the asset and if the value currently carried on balance sheets cannot be recovered in full, this results in write-off.
write
There
may also be a knock-on
on effect on related deferred tax and holding company investment balances. Rapidly changing oil prices
make it difficult to judge the present value of assets for investment de
decisions on capital allocation, on
o acquisition or for
accounting impairment purposes.
A recent Financial Times article demonstrates just how quickly forward price curves have changed, underlining the difficulty in
judging the correct present value of an asset. The $60/bbl oil price that used to be the lower end assumption in models for many
companies has now become a reality.
Companies may also find renegotiating debt challenging. At times of high oil prices, refinancing existing debt either through
bank borrowings or issuing
ing new bonds tends to be relatively straightforward. However, lower asset values and increased
default risks mean that borrowers will face increasing challenges, including the need to pay higher interest rates or enhance
security packages, if they are ablee to borrow in the first place. The price deck utilized by reserve base lenders (RBLs) may also be
reduced significantly, leading to a reduction of RBL facilities and the acceleration of debt repayment schedules, putting even
eve
more strain on balance sheets of oil producers.
According to energy
nergy industry analysts (Wood Mackenzie), nearly $380 billion in capital spending (capex) has been cut on 68
existing oil and gas development costs. This slowdown will stifle the development of some 27 barrels of oil equivalent. Petrobas
Petro
announced a reduction
ion of some 25% in its five year spending (2015 to 2019) from $130 billion to $98.4 billion. On top of the
capex cuts, Petrobras also plans to cut production by around 2% from a previously planned total of 2.19
2.1 million barrels a day to
2.15 million. Chevron
n Corp also announced that it planned to cut its 2016 capex
ex budget by 24% year over year to $26.6 billion
(nil change in FY15). Oil major BP’s capital spending for the year 2015 was around $19 billion, down from a previous estimate of
under $24-$26 billion.. The capex is expected to fall to $17 billion to $19 billion a year through to 2017.
2017 The oil giant said it would
eliminate 4000 of the approximately 24000 positions in its E&P units this year. BP’s biggest European rival,
rival Royal Dutch Shell
estimates that the Shell-BG combo will spend $33 billion in 2016. T
The
he 2016 budget is around 30% lower than what Royal Dutch
Shell & BG spent in 2015. Capital
apital spending fell to $28.9 billion in 2015, down $8.4 billion year on year. Shell expects to eliminate
additional 2800 jobs after a cut of 7500 jobs last year.
More companies may also return to hedge accounting, which was increasingly used in the wake of the financial crisis. Lower
prices may mean more producing companies, including smal
smaller
ler ones, could resort to ‘locking down’ their output with hedging
instruments. Finally, lower pricing leads to higher counterparty credit risk where counterparties are dependent on oil prices for
cash flow. Where a company is part of a joint venture (JV), there could be an increased risk of JV partners being unable to fund
their share of liabilities – including decommissioning costs – and this could result in other partners having to take on their share,
putting increasing pressure on their own cash reserv
reserves.
Source: Oilcrudeprice.com
Source: Thomas Reuters
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Pain for the Developed World
The high profile victims of the falling crude oil prices are in the emerging markets. While cheap oil has been painful for some
sectors in developed economies, this has been counteracted by the benefits reaped by consumers. Low oil prices have kept
inflation
on close to zero, acting as an effective tax cut for many. However, it is believed that prices could now be approaching an
inflection point for the US economy where many oil producers could be at risk of default
default. Danske Bank
Ban described crude price
decline ass a “risk to the US economy”, as low prices put pressure on the oil sector. While oil investment makes up just 1 % of
US GDP, declines last year dragged GDP down 0.4 percentage points
points.
While the negative impacts of oil prices arrive immediately, the posit
positive
ive effects take longer to materialize. While oil might act
as a depressant for now, it will become a stimulant later. For euro zone countries, the outlook is much rosier. The German
bank believes that the renewed oil sell-off
off could add to growth for euro area economies across 2016. It looks like cheap oil will
help the currency bloc yet again.
Source: EIA
Source: U.S Energy Info
Information Administration
Source: Macroband Financial
Effects on Monetary Policy
As is often the case with monetary policy, the answer depends on the source of the shock. Supply rather than demand has
been the dominant factor behind the recent fall in the oil price. As such, the shock should be treated primarily as a simple
si
cost
or price-level shock. Such price-level
level shocks aff
affect the price level permanently but have only a temporary effect on the rate of
inflation. The typical prescription for monetary policy, therefore, is to accommodate such shock which is to look through
them in setting policy.
Policymakers need to consider not just the source of the shock but also its persistence. The sharp fall of oil prices over the past
six months, particularly if sustained in coming months, will depress annual inflation rates for
or a protracted period quite
possibly well into next year. This brings the depressive impact on headline inflation into the timeframe over which monetary
policy can have an influence on the economy. While it takes some 18 to 24 months for the full effects of any change in interest
rates to feed through to the economy, the initial effects can take place earlier.
However, the situation is complicated in many economies by the fact that inflation is already very low to start with. When
inflation is far below target,
arget, central banks' tolerance for further negative inflation impulses can be low. In addition, there may
be an elevated risk for household and corporate inflation expectations to fall as a result of the fall in oil prices. Such a scenario
may give monetary
ry policy reason to react more forcefully
forcefully.
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Source: US Energy Information Administration
Source: Bloomberg
Effects on Inflation
The recent sharp fall in oil prices will significantly reduce global inflation in the course of 2016, increasing the number of
countries with low or even negative inflation. This disinflationary impact should be mostly temporary, dissipating by the
t
end of 2016 but the coincident fall in inflation expectations in high-income
income countries and reduced price pressure in some
large oil importing emerging economies has impacted the debate on monetary policy.
In the assessment of the World Bank, global inflation would fall by 0.4
0.4–0.9
0.9 % as a result of a fall in oil prices
pric of 30 per cent.
However, the effects vary from country to country depending on factors such as the weight oil products have in the CPI
basket, the effects of the oil price on wages and other prices, exchange rate developments, how much freedom of action
monetary policy has and the structure of oil-related
related taxes and subsidies.
The fall in the price of oil will have a greater direct effect on inflation in countries in which oil
oil-related
related products form a large
part of the CPI basket. The
he size of the indirect effects which is to say how much other prices and wages are affected
affecte by a fall
in the price of oil also varies from country to country. The level of oil
oil-related
related taxes also affects how great the impact will be
on consumer prices.
Source: Extractive Industries for Development Reports
Source: Bloomberg
After five years of relative stability at around 105$/barrel oil prices fell sharply because of a combination of short and longlo
term factors. From upward surprises in supply and downward surprises in demand, to OPEC policies, to appreciation of US
dollar. The decline in oil prices has significant macroeconomic, financial and policy implications. If sustained, it will support
sup
growth and reduce inflationary, external, and fiscal pressures iin a large number of oil-importing
importing countries whilst sharply
lower oil prices will weaken fiscal and external positions and reduce economic activity in a few oil-exporting
oil
countries.
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What Now?
The collapse in oil prices in the first half of January seems to have halted. On January 20th closing prices for WTI and Brent
reached nadirs of $28.35/bbl and $27.88 / bbl respectively, since then Brent oil has moved briefly to $37.62/bbl and WTI has
lagged a little behind to $35.60/bbl.. Perhaps some of the more ffevered
evered forecasts of oil prices falling to as low as $10/bbl are
extreme and better days do lie ahead for oil prices. However, before victory over the bearish forces is declared we should look
lo
at the main factors driving this optimism.
Persistent speculation
on about a deal between OPEC and leading non
non-OPEC
OPEC producers to cut output appears to be just that:
speculation. It is OPEC's business whether or not it makes output cuts either alone or in concert with other producers but the
th
likelihood of coordinated cuts is very low. This removes one driver of b
bullishness.
Source: EIA Short term Energy Outlook
Source: EIA
Another widely-held view is that OPEC
PEC production, other than Iran will not grow as strongly in 2016 as it did in 2015. Iran
has ramped up production in preparation for its emergence from nuclear sanctions and preliminary data suggests that Saudi
Arabia's shipments have increased. Another driver of bullishness is that oi
oill demand growth will receive a boost from the
collapse in oil prices to below $30/bbl. The global oil demand growth will ease back considerably in 2016 to 1.2 mb/d (Source:
IEA Oil Market Report).. Estimates by the International Monetary Fund that global GD
GDP
P growth in 2016 will be 3.4% followed
by 3.6% in 2017 is heavily filled with risks to growth in Brazil, Russia and of course slower growth in China.
Source: The Economy Forecast Agency
Source: IEA, Oil Market Report
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The expected fall in non-OPEC
OPEC output is another driver of possibly higher prices later this year. The total non-OPEC
non
output is
expected to fall by a net 600 kb/d in 2016. The number could be higher of course but there is a lingering feeling that the big
fall-off
off in production from US shale producers is taking an awful long time to happen
happen. In the early part of 2016, there is
surplus of supply over demand and OPEC production remains flat at 32.7 mb/d. There is an implied stock build of 2 mb/d
followed by a 1.55 mb/d build in Q216. The stock building in the second half of the year is expected to be increase by 0.3 mb/d.
With the market already awash in oil, it is very hard to tell whether the prices will rise significantly in the short term.
Over the medium term,
rm, oil prices are projected to recover from their current lows, but will remain below recent peaks and
witness considerable volatility for a couple of years. The pace of the recovery in prices will largely depend on the speed at
which supply will adjust to
o weaker demand conditions. In the longer term, adjustment will take place from both conventional
and unconventional sources through cancellation of projects. While supply is likely to be curtailed,
curtailed demand is expected to
pick up along with the expected recovery
overy in global activity and in line with broader demographic trends.
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Source: International Energy Agency
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CD Equi has applied for registration under SEBI (Research Analysts) Regulations, 2014. Further, CD Equi hereby declares that –
•
No disciplinary action has been taken against CD Equi by any of the regulatory authorities.
•
CD Equi/its associates/research analysts
ts do not have any financial interest/beneficial interest of more than one percent/material
conflict of interest in the subject company(s) (kindly disclose if otherwise).
•
CD Equi/its associates/research analysts have not received any compensation from the subject company(s) during the past twelve
months.
•
CD Equi/its research analysts has not served as an officer, director or employee of company covered by analysts and has not been
b
engaged in market making activity of the company covered by analysts.
This document is solely for the personal information of the recipient and must not be singularly used as the basis of any investment
investme
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should
sho
make
such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies
c
referred to in this document (including the merits and risks involved) and should consult their own advisors to determine
dete
the merits and
risks of such an investment.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions
positio and trading
volume, as opposed to focusing on a company's fundamentals and as such, may not match with a report on a company's fundamentals.
f
The information in this document has been printed on the basis of publicly available information, internal data and other reliable
rel
sources
believed to be true but we do not represent that it is accurate or complete and it should not be relie
relied
d on as such, as this document is for
general guidance only. CD Equi or any of its affiliates/group companies shall not be in any way responsible for any loss or damage
d
that may
arise to any person from any inadvertent error in the information contained in this report. CD Equi has not independently verified all the
information contained within this document. Accordingly, we cannot testify nor make any representation or warranty, express or
o implied,
to the accuracy, contents or data contained within this doc
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While, CD Equi endeavors to update on a reasonable basis the information discussed in this material, there may be regulatory compliance or
other reasons that prevent us from doing so.
This document is being supplied to you solely for your informa
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damage that may arise from or in connection with
th the use of this information.
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Registered Office: 37, Shakespeare Sarani, 1st Floor, Kolkata – 700 017; Phone: +91(33) 4488 0000; Fax: +91(33) 2289 2557; Corporate Office: 10,
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Equities
Derivatives
Commoditie
ities
Distribution of Mutual Funds
Dist
istribution of Life Insurance
13