Moxit Final

OVERVIEW Of COMMODITY MARKET AND FUNDAMENTAL ANALYSIS OF CRUDEOIL
Executive Summary
The basic objective of this project is to give brief information about the Commodities Market in India and detailed about the Fundamental Analysis of Crude oil. This project includes the history of commodities market in india and history of crude oil market. Other aspect of this project fundamental analysis of crude oil. It also discusses about the major Crude oil Producing and consuming countries and also discusses about demand and supply of the crude oil and also includes import and export countries. This project includes the crude oil shock and petrol dollar scam. At last financial analysis is shown in the form of co-rrelation. Lastly conclusions are shown briefly about the crude oil.
B.M. COLLEGE OF BUSINESS ADMINISTRATION
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Chapter-1 Introduction To Economy
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India has been one of the best performers in the world economy in recent years, but rapidly rising inflation and the complexities of running the worlds biggest democracy are proving challenging. Indias economy has been one of the stars of global economics in recent years, growing 9.2% in 2007 and 9.6% in 2006. Growth had been supported by markets reforms, huge inflows of FDI, rising foreign exchange reserves, both an IT and real estate boom, and a flourishing capital market. The economy of India is the twelth largest economy in the world by nominal value and the fourth largest by purchasing power parity (PPP). By 2008, India had established itself as the world's second-fastest growing major economy. However, the year 2009 saw a significant slowdown in India's official GDP growth rate to 6.1% as well as the return of a large projected fiscal deficit of 10.3% of GDP which would be among the highest in the world. India's large service industry accounts for 62.6% of the country's GDP while the industrial and agricultural sector contribute 20% and 17.5% respectively. Agriculture is the predominant occupation in India, accounting for about 52% of employment. The service sector makes up a further 34%, and industrial sector around 14%. The labor force totals half a billion workers. Major agricultural products include rice, wheat, oilseed, cotton, jute, tea, sugarcane, potatoes, cattle, water buffalo, sheep, goats, poultry and fish Major industries include telecommunications, textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery, information technology enabled services and software. India's per capita income (nominal) is $1032, ranked 139th in the world, while its per capita (PPP) of US$2,932 is ranked 128th. Previously a closed economy, India's trade has grown fast. India currently accounts for 1.5% of World trade as of 2007 according to the WTO.
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Economy of India
Currency Fiscal year Trade organizations Statistics
1 Indian Rupee (INR) () = 100 Paise
1 April 31 March WTO, SAFTA, G-20 and others
GDP
$1.242 trillion (2009) $3.528 trillion (2009) (PPP)
GDP growth GDP per capita
6.7% (2008/2009) $1,032 (2009) $2,932 (2009) agriculture: 17.5%, industry: 20% and services: 62.6% (2009 est.) 7.8% (CPI) (2008) 22% (2008)
GDP by sector
Inflation (CPI) Population below poverty line Gini index
36.8 (List of countries)

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Labour force Labour force by occupation Unemployment Main industries
467 million (2009 est.) agriculture: 52%, industry: 14% and services: 34% (2003) 9.5% (2009 est.) telecommunications, textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery, information technology
External
Exports Export goods
$155 billion f.o.b (2009 est.) petroleum products, textile goods, gems and jewelry, engineering goods, chemicals, leather manufactures US 12.3%, UAE 9.4%, China 9.3% (2008)
Main export partners Imports Import goods Main import partners Gross external
$232.3 billion f.o.b (2009 est.) crude oil, machinery, gems, fertilizer, chemicals
China 11.1%, Saudi Arabia 7.5%, US 6.6%, UAE 5.1%, Iran 4.2%, Singapore 4.2%, Germany 4.2% (2008) $232.5 billion (31 December 2009 est.)
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debt Public finances
Public debt
$163.8 billion (2009) 60.1% of GDP $153.5 billion (2008 est.) $223 billion (2009 est.) $1.724 billion (2005) $287.37 billion (end-Dec 2009)
Revenues
Expenses
Economic aid
Foreign reserves
Main data source: CIA World Fact Book All values, unless otherwise stated, are in USdollars
Chapter-2
B.M. COLLEGE OF BUSINESS ADMINISTRATION Page 6
Introduction To Industry
Introduction to Industry
Crude oil is one of the most necessitated worldwide required commodities. Any slightest fluctuation in crude oil prices can have both direct and indirect influence on the economy of the countries. The volatility of crude oil prices drove many companies away. Therefore, prices have been regularly and closely monitored by economists. Now a days prices have
shoot up to record levels of USD 125 per bbl. This is an increase of nearly 70% from that of the previous year. The consumption level of oil is projected to be rise by 1.2 million bbl/d in the year 2008. The consumption of China is presumed to be rise by 0.4 million bbl/d in current year, as it has already registered an increase of 0.8 million bbl/d. Crude oil prices act like any other product cost with more variation taken place during shortage and excess supply. Studies have conducted to analyze the impact of rise in crude oil price to the economic growth in the OPEC (Organization of Petroleum Exporting Countries) countries. It has been observed that $10 in the crude oil price means decrease in the economic growth of the OPEC countries by 0.5%.
Any massive increase or decrease in crude oil has its impact on the condition of stock markets in throughout the world. The stock exchanges of every country keep a close eye on any up and downward movement of the crude oil price. India fulfills its major crude oil requirements by importing it from oil producing nations. India meets more than 80% of its requirement by importing process. Therefore, any upward and downward motion of prices are closely tracked in the domestic marketplace. Many times it has been recorded that prices of essential products like crude also acts as a prime driver in becoming reason Keeping in view the conditional status of present scenario, most of the observers at the international arena is much more interested in knowing the current oil price and the outcome of this price burst. These have become a hot bound question in all over world. There tend to be exist two schools of thought. One side argues that high prices are cyclical and arise due to the coincidence occurrence of potentially reversible factors which all are going in the same direction. But the other schools of thoughts opine that there is a fundamental structural change in the oil market which is pointing towards the shortage of investment from a decade. Both the thoughts are important. As if the prices are cyclic in nature.
Any fluctuation in crude oil affects the other industrial segments also. Higher crude oil price implies to the higher price of energy, which in turns negatively affects other trading practices that are directly or indirectly depends on it. Crude Oil has been traded in throughout the world and there prices are behaving like any other commodity as swinging. In the short term, price of crude oil is influenced by many factors like socio and political
events, status of financial markets, whereas from medium to long run it is influenced by the fundamentals of demand and supply which thus results into self price correction mechanism. This sustained movement in the northern side underlines some of the fundamental changes in the marketplace. On the demand supply, where in the past the more and more consumption was come from the OPEC countries, especially the US but in today's date much of the incremental demand flow is from emerging economies. Particularly China and India which have recorded more than 40% contribution in the incremental global consumption during the time period of 2000-06. International price of crude oil is projected to shoot up to 100 million barrels per day by 2015. While demand may touch to a great height, supply will juggle to keep up the pace. The production from existing sources has been reduced by 4% per annum, which implies that around 3 million barrels per day of new capacity is required to be added in every year for offsetting. There are innumerable factors which influence the price movement of crude oil in throughout the world. Like methods and technology using for increase the oil production, storing up of crude oil by rich and prosperous countries, changes introduced in tax policy, social and political issues etc. In recent years many factors have emerged as the key figures in influencing the price index of crude oil in throughout the world.
The Crude oil Prices have been buffeted by many factors, which are summarized as below
Production The OPEC nations are the major producer of world's crude oil. Therefore, every policy made by such countries related to the crude oil prices have their influence on crude oil prices. Any decision taken by OPEC nations for increasing or decreasing production of crude oil impacts the price level of crude oil in international commodity markets. Natural Causes
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In recent years, global community has witnessed many events which in turns have volatility effects on the price level of crude oil. Like hurricane katrina and other type of tropical cyclone have hit the major portion of globe, which as a result driven the crude oil prices to reach at its peak.
Inventory In throughout the world, oil producers and consumers get stock their crude oil for their future requirements. This gives rise to speculation on price expectations and sale/arbitrage chances in case any unexpected thing cracks during supply and demand equations. Any upward or downward movement in inventory level shoots up volatility in price index of crude oil, which generates lot of changing movement in sensex.
Demand With a sharp rise in economic demand, requirement of crude oil is increasing to manifold in context to the limited supply. The high demand economy of crude oil is putting undue pressure on the available fixed resources. The major gap created between demand and supply of crude oil is forcing the price curve of crude oil to rise in upward direction. The price structure of crude oil is also influenced by the cyclical pattern. It has been observed that requirement of crude oil got increased during summer season in comparative to the winter season. As any dip in the seasonal temperature increases the consumption of energy for heating purpose in many cold nations. Demand shoots up and thus generates the requirement of tapping the inventories. Similarly, in summer, supply exceeds the demand and petroleum inventories are build up for storage purpose. Henceforth, crude oil prices drop.
Chapter -3
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Research Methodology
CONTENTS
Objective of study Research designed Data collection tools Benefits of study Limitation of study
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Research Methodology
Objectives of the study
To get knowledge about Crude oil. To give basic information about commodities. To give information about commodities commities and exchanges. To get knowledge about Indian Commodity Market specially focus on Crude oil. To get idea of relationship between price of Crude oil and Euro as well as Crude oil and Dollar To give in depth information to investors who would like to trade in future using the MCX and NCDEX platform. To get idea about factor affecting crude oil Demand and supply Major producing countries Major importing countries Major consuming countries Major exporting countries Past Trends
Research design
Descriptive study
The project consists of Research design based on descriptive study. In this project each and every points concerning to crude oil and Euro as well as Dollar are covered.
Data collection tools

Secondary data
Here in this project data which is use for preparing project is already available thatwhy it is called secondary data.The following are the sources of secondary data. Internet Standardized Book Company Reports
Benefits of the study

1) From the study investors get knowledge about crude. 2) It increases the confidence level of the new investors who would like to trade in crude future. 3) It makes new investors familiar with the commodity and its rules and regulations. 4) It indicates various factors affecting crude prices. 5) It shows past trends of crude prices so it will be helpful for prediction.
Limitations of the study

1. Past performance of crude oil prices may not be sustained in future due to unforeseen events.
2. Investors just cannot read this project and start investing in commodities market as not much as not much practical information is given in the project about commodities trading. 3. The project is based on past datas and predicts the future as we all know the future is always uncertain.
4. We only consider some macro economic factor. They are many macro economics
factor affecting in Crude oil. 5. Due to time constrains only limited analytical tools are covered
Chapter - 4
History& introduction Of Commodity market

CHAPTER CONTENTS
Introduction to Commodity Market History of Evolution of commodity markets India and the commodity market Structure of commodity market
Introduction to Commodity Market

What is Commodity? Any product that can be used for commerce or an article of commerce which is traded on an authorized commodity exchange is known as commodity. The article should be movable of value, something which is bought or sold and which is produced or used as the subject or
barter or sale. In short commodity includes all kinds of goods. Indian Forward Contracts (Regulation) Act (FCRA), 1952 defines goods as every kind of movable property other than actionable claims, money and securities.7 In current situation, all goods and products of agricultural (including plantation), mineral and fossil origin are allowed for commodity trading recognized under the FCRA. The national commodity exchanges, recognized by the Central Government, permits commodities which include precious (gold and silver) and non-ferrous metals, cereals and pulses, ginned and un-ginned cotton, oilseeds, oils and oilcakes, raw jute and jute goods, sugar and gur, potatoes and onions, coffee and tea, rubber and spices. Etc.
What is a commodity exchange?

A commodity exchange is an association or a company or any other body corporate organizing futures trading in commodities for which license has been granted by regulating authority.
What is Commodity Futures?

A Commodity futures is an agreement between two parties to buy or sell a specified and standardized quantity of a commodity at a certain time in future at a price agreed upon at the time of entering into the contract on the commodity futures exchange. The need for a futures market arises mainly due to the hedging function that it can perform. Commodity markets, like any other financial instrument, involve risk associated with frequent price volatility. The loss due to price volatility can be attributed to the following reasons:
Consumer Preferences: - In the short-term, their influence on price volatility is small since it is a slow process permitting manufacturers, dealers and wholesalers to adjust their inventory in advance. Changes in supply: - They are abrupt and unpredictable bringing about wild fluctuations in prices. This can especially noticed in agricultural commodities where the weather plays a major role in affecting the fortunes of people involved in this industry. The futures market has evolved to neutralize such risks through a mechanism; namely hedging. The objectives of Commodity futures: B.M. COLLEGE OF BUSINESS ADMINISTRATION Page 16
Hedging with the objective of transferring risk related to the possession of physical assets through any adverse moments in price. Liquidity and Price discovery to ensure base minimum volume in trading of a commodity through market information and demand supply factors that facilitates a regular and authentic price discovery mechanism.
Maintaining buffer stock and better allocation of resources as it augments reduction in inventory requirement and thus the exposure to risks related with price fluctuation declines. Resources can thus be diversified for investments.
Price stabilization along with balancing demand and supply position. Futures trading leads to predictability in assessing the domestic prices, which maintains stability, thus safeguarding against any short term adverse price movements. Liquidity in Contracts of the commodities traded also ensures in maintaining the equilibrium between demand and supply.
Flexibility, certainty and transparency in purchasing commodities facilitate bank financing. Predictability in prices of commodity would lead to stability, which in turn would eliminate the risks associated with running the business of trading commodities. This would make funding easier and less stringent for banks to commodity market players.
History of Evolution of commodity markets

Commodities future trading was evolved from need of assured continuous supply of seasonal agricultural crops. The concept of organized trading in commodities evolved in Chicago, in 1848. But one can trace its roots in Japan. In Japan merchants used to store Rice in warehouses for future use. To raise cash warehouse holders sold receipts against the stored rice. These were known as rice tickets. Eventually, these rice tickets become accepted as a kind of commercial currency. Latter on rules came in to being, to standardize the trading in rice tickets. In 19th century Chicago in United States had emerged as a major commercial hub.
So that wheat producers from Mid-west attracted here to sell their produce to dealers & distributors. Due to lack of organized storage facilities, absence of uniform weighing & grading mechanisms producers often confined to the mercy of dealers discretion. These situations lead to need of establishing a common meeting place for farmers and dealers to transact in spot grain to deliver wheat and receive cash in return. Gradually sellers & buyers started making commitments to exchange the produce for cash in future and thus contract for futures trading evolved. Whereby the producer would agree to sell his produce to the buyer at a future delivery date at an agreed upon price. In this way producer was aware of what price he would fetch for his produce and dealer would know about his cost involved, in advance. This kind of agreement proved beneficial to both of them. As if dealer is not interested in taking delivery of the produce, he could sell his contract to someone who needs the same. Similarly producer who not intended to deliver his produce to dealer could pass on the same responsibility to someone else. The price of such contract would dependent on the price movements in the wheat market. Latter on by making some modifications these contracts transformed in to an instrument to protect involved parties against adverse factors such as unexpected price movements and unfavorable climatic factors. This promoted traders entry in futures market, which had no intentions to buy or sell wheat but would purely speculate on price movements in market to earn profit.
Trading of wheat in futures became very profitable which encouraged the entry of other commodities in futures market. This created a platform for establishment of a body to regulate and supervise these contracts. Thats why Chicago Board of Trade (CBOT) was established in 1848. In 1870 and 1880s the New York Coffee, Cotton and Produce Exchanges were born. Agricultural commodities were mostly traded but as long as there are buyers and sellers, any commodity can be traded. In 1872, a group of Manhattan dairy merchants got together to bring chaotic condition in New York market to a system in terms of storage, pricing, and transfer of agricultural products. In 1933, during the Great Depression, the Commodity Exchange, Inc. was established in New York through the merger of four small exchanges the National Metal Exchange, the Rubber Exchange of New York, the National Raw Silk Exchange, and the New York Hide Exchange.
The largest commodity exchange in USA is Chicago Board of Trade, The Chicago Mercantile Exchange, the New York Mercantile Exchange, the New York Commodity Exchange and New York Coffee, sugar and cocoa Exchange. Worldwide there are major futures trading exchanges in over twenty countries including Canada, England, India, France, Singapore, Japan, Australia and New Zealand.
India and the commodity market

The history of organized commodity derivatives in India goes back to the nineteenth century when Cotton Trade Association started futures trading in 1875, about a decade after they started in Chicago. Over the time datives market developed in several commodities in India. Following Cotton, derivatives trading started in oilseed in Bombay (1900), raw jute and jute goods in Calcutta (1912), Wheat in Hapur (1913) and Bullion in Bombay (1920). However many feared that derivatives fuelled unnecessary speculation and were detrimental to the healthy functioning of the market for the underlying commodities, resulting in to banning of commodity options trading and cash settlement of commodities futures after
independence in 1952. The parliament passed the Forward Contracts (Regulation) Act, 1952, which regulated contracts in Commodities all over the India. The act prohibited options trading in Goods along with cash settlement of forward trades, rendering a crushing blow to the commodity derivatives market. Under the act only those associations/exchanges, which are granted reorganization from the Government, are allowed to organize forward trading in regulated commodities. The act envisages three tire regulations: 1. Exchange which organizes forward trading in commodities can regulate trading on day-to-day basis; 2. Forward Markets Commission provides regulatory oversight under the powers delegated to it by the central Government. 3. The Central Government- Department of Consumer Affairs, Ministry of Consumer Affairs, Food and Public Distribution- is the ultimate regulatory authority. The commodities future market remained dismantled and remained dormant for about four decades until the new millennium when the Government, in a complete change in a policy, started actively encouraging commodity market. After Liberalization and Globalization in 1990, the Government set up a committee (1993) to examine the role of futures trading. The Committee (headed by Prof. K.N. Kabra) recommended allowing futures trading in 17 commodity groups. It also recommended strengthening Forward Markets Commission, and certain amendments to Forward Contracts (Regulation) Act 1952, particularly allowing option trading in goods and registration of brokers with Forward Markets Commission. The Government accepted most of these recommendations and futures trading was permitted in all recommended commodities. It is timely decision since internationally the commodity cycle is on upswing and the next decade being touched as the decade of Commodities. Commodity exchange in India plays an important role where the prices of any commodity are not fixed, in an organized way. Earlier only the buyer of produce and its seller in the market judged upon the prices. Others never had a say. Today, commodity exchanges are purely speculative in nature. Before discovering the price, they reach to the producers, end-users, and even the retail investors, at a grassroots level. It brings a price transparency and risk management in the vital market. A big difference between a typical auction, where a single auctioneer announces the bids and the Exchange is that people are not only competing to buy but also to sell. By Exchange rules and by law, no one can bid under a higher bid, and no one can offer to sell higher than someone elses lower
offer. That keeps the market as efficient as possible, and keeps the traders on their toes to make sure no one gets the purchase or sale before they do. Since 2002, the commodities future market in India has experienced an unexpected boom in terms of modern exchanges, number of commodities allowed for derivatives trading as well as the value of futures trading in commodities, which crossed $ 1 trillion mark in 2006. Since 1952 till 2002 commodity datives market was virtually non- existent, except some negligible activities on OTC basis.
Structure of commodity market

Ministry of consumer affairs
FMC (Forwards Market Commission)
Commodity Exchange
National Exchange
Regional Exchange
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NCDEX
MCX
NMCE
NBOT
22 other regional Exchanges
Chapter-5 Introduction Of
Derivatives
CHAPTER CONTENTS
Derivatives Concept Commodity Derivatives Difference between Commodity and Fiancial Derivatives Forms of Derivatives Participants
Derivatives Concept
Derivative is a product/contract which does not have any value on its own i.e. it derives its value from some underlying. The primary objectives of any investor are to maximize returns and minimize risks. Derivatives are contracts that originated from the need to minimize risk. The word 'derivative' originates from mathematics and refers to a variable, which has been derived from another variable. Derivatives are so called because they have no value of their own. They derive their value from the value of some other asset, which is known as the underlying. For example, a derivative of the shares of Infosys (underlying), will derive its value from the share price (value) of Infosys. Similarly, a derivative contract on soya bean depends on the price of soya bean.
Derivatives are specialized contracts which signify an agreement or an option to buy or sell the underlying asset of the derivate up to a certain time in the future at a prearranged price, the exercise price. The contract also has a fixed expiry period mostly in the range of 3 to 12 months from the date of commencement of the contract. The value of the contract depends on the expiry period and also on the price of the underlying asset. For example A farmer fears that the price of soya bean (underlying), when his crop is ready for delivery will be lower than his cost of production. Let's say the cost of production is Rs 8,000 per ton. In order to overcome this uncertainty in the selling price of his crop, he enters into a contract (derivative) with a merchant, who agrees to buy the crop at a certain price (exercise price), when the crop is ready in three months time (expiry period). In this case, say the merchant agrees to buy the crop at Rs 9,000 per ton. Now, the value of this derivative contract will increase as the price of soya bean decreases and vice-a-versa. If the selling price of soybean goes down to Rs 7,000 per ton, the derivative contract will be more valuable for the farmer, and if the price of soybean goes down to Rs 6,000, the contract becomes even more valuable. This is because the farmer can sell the soybean he has produced at Rs .9000 per tonne even though the market price is much less. Thus, the value of the derivative is dependent on the value of the underlying. If the underlying asset of the derivative contract is coffee, wheat, pepper, cotton, gold, silver, precious stone or for that matter even weather, then the derivative is known as a commodity derivative. Derivative contracts can be standardized and traded on the stock exchange. Such derivatives are called exchange-traded derivatives. Or they can be customized as per the needs of the user by negotiating with the other party involved. Such derivatives are called over-the-counter (OTC) derivatives. Continuing with the example of the farmer above, if he thinks that the total production from his land will be around 150 quintals, he can either go to a food merchant and enter into a derivatives contract to sell 150 quintals of soya bean in three months time at Rs 9,000 per ton. Or the farmer can go to a
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commodities exchange, like the National Commodity and Derivatives Exchange Limited, and buy a standard contract on soybean.
Commodity derivatives
Derivatives as a tool for managing risk first originated in the commodities markets. They were then found useful as a hedging tool in financial markets as well. In India, trading in commodity futures has been in existence from the nineteenth century with organised trading in cotton through the establishment of Cotton Trade Association in 1875. Over a period of time, other commodities were permitted to be traded in futures exchanges. Regulatory constraints in 1960s resulted in virtual dismantling of the commodities future markets. It is only in the last decade that commodity future exchanges have been actively encouraged. However, the markets have been thin with poor liquidity and have not grown to any significant level. In this chapter we look at how commodity derivatives differ from financial derivatives. We also have a brief look at the global commodity markets and the commodity markets that exist in India.
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Difference between commodity and financial derivatives

The basic concept of a derivative contract remains the same whether the underlying happens to be a commodity or a financial asset. However there are some features which are very peculiar to commodity derivative markets. In the case of financial derivatives, most of these contracts are cash settled. Even in the case of physical settlement, financial assets are not bulky and do not need special facility for storage. Due to the bulky nature of the underlying assets, physical settlement in commodity derivatives creates the need for warehousing. Similarly, the concept of varying quality of asset does not really exist as far as financial underlyings are concerned. However in the case of commodities, the quality of the asset underlying a contract can vary largely. This becomes an important issue to be managed. We have a brief look at these issues.
Physical settlement
Physical settlement involves the physical delivery of the underlying commodity, typically at an accredited warehouse. The seller intending to make delivery would have to take the commodities to the designated warehouse and the buyer intending to take delivery would have to go to the designated warehouse and pick up the commodity. This may sound simple, but the physical settlement of commodities is a complex process. The issues faced in physical settlement are enormous. There are limits on storage facilities in different states. There are restrictions on interstate movement of commodities. Besides state level octroi and duties have an impact on the cost of movement of goods across locations. The process of taking physical delivery in commodities is quite different from the process of taking physical delivery in financial assets. We take a general overview at the process flow of physical settlement of commodities. Later on we will look into details of how physical settlement happens on the NCDEX. Delivery notice period
Unlike in the case of equity futures, typically a seller of commodity futures has the option to give notice of delivery. This option is given during a period identified as 'delivery notice period'. Such contracts are then assigned to a buyer, in a manner similar to the assignments to a seller in an options market. However what is interesting and different from a typical options exercise is that in the commodities market, both positions can still be closed out before expiry of the contract. The intention of this notice is to allow verification of delivery and to give adequate notice to the buyer of a possible requirement to take delivery. These are required by virtue of the fact that the actual physical settlement of commodities requires preparation from both delivering and receiving members. Typically, in all commodity exchanges, delivery notice is required to be supported by a warehouse receipt. The warehouse receipt is the proof for the quantity and quality of commodities being delivered. Some exchanges have certified laboratories for verifying the quality of goods. In these exchanges the seller has to produce a verification report from these laboratories along with delivery notice. Some exchanges like LIFFE, accept warehouse receipts as quality verification documents while others like BMF-Brazil have independent grading and classification agency to verify the quality. In the case of BMF-Brazil a seller typically has to submit the following documents:
A declaration verifying that the asset is free of any and all charges, including fiscal debts related to the stored goods.
A provisional delivery order of the good to BM&F (Brazil), issued by the warehouse. A warehouse certificate showing that storage and regular insurance have been paid.
Assignment Whenever delivery notices are given by the seller, the clearing house of the exchange identifies the buyer to whom this notice may be assigned. Exchanges follow different practices for the assignment process. One approach is to display the delivery notice and allow buyers wishing to take delivery to bid for taking delivery. Among the international exchanges, BMF, CBOT and CME display delivery notices. Alternatively, the clearing houses may assign deliveries to buyers on some basis. Exchanges such as COMMEX and the Indian commodities exchanges have adopted this method.
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Delivery After the assignment process, clearing house/ exchange issues a delivery order to the buyer. The exchange also informs the respective warehouse about the identity of the buyer. The buyer is required to deposit a certain percentage of the contract amount with the clearing house as margin against the warehouse receipt. The period available for the buyer to take physical delivery is stipulated by the exchange. Buyer or his authorised representative in the presence of seller or his representative takes the physical stocks against the delivery order. Proof of physical delivery having been effected is forwarded by the seller to the clearing house and the invoice amount is credited to the seller's account. In India if a seller does not give notice of delivery then at the expiry of the contract the positions are cash settled by price difference exactly as in cash settled equity futures contracts.
Warehousing
One of the main differences between financial and commodity derivative is the need for warehousing. In case of most exchange-traded financial derivatives, all the positions are cash settled. Cash settlement involves paying up the difference in prices between the time the contract was entered into and the time the contract was closed. For instance, if a trader buys futures on a stock at Rs.100 and on the day of expiration, the futures on that stock close Rs.120, he does not really have to buy the underlying stock. All he does is take the difference of Rs.20 in cash. Similarly the person who sold this futures contract at Rs.100, does not have to deliver the underlying stock. All he has to do is pay up the loss of Rs.20 in cash. In case of commodity derivatives however, there is a possibility of physical settlement. Which means that if the seller chooses to hand over the commodity instead of the difference in cash, the buyer must take physical delivery of the underlying asset? This requires the exchange to make an arrangement with warehouses to handle the settlements. The efficacy of the commodities settlements depends on the warehousing system available. Most international commodity exchanges used certified warehouses (CWH) for the purpose of
handling physical settlements. Such CWH are required to provide storage facilities for participants in the commodities markets and to certify the quantity and quality of the underlying commodity. The advantage of this system is that a warehouse receipt becomes a good collateral, not just for settlement of exchange trades but also for other purposes too. In India, the warehousing system is not as efficient as it is in some of the other developed markets. Central and state government controlled warehouses are the major providers of agriproduce storage facilities. Apart from these, there are a few private warehousing being maintained. However there is no clear regulatory oversight of warehousing services.
Quality of underlying assets

A derivatives contract is written on a given underlying. Variance in quality is not an issue in case of financial derivatives as the physical attribute is missing. When the underlying asset is a commodity, the quality of the underlying asset is of prime importance. There may be quite some variation in the quality of what is available in the marketplace. When the asset is specified, it is therefore important that the exchange stipulate the grade or grades of the commodity that are acceptable. Commodity derivatives demand good standards and quality assurance/ certification procedures. A good grading system allows commodities to be traded by specification. Currently there are various agencies that are responsible for specifying grades for commodities. For example, the Bureau of Indian Standards (BIS) under Ministry of Consumer Affairs specifies standards for processed agricultural commodities whereas AGMARK under the department of rural development under Ministry of Agriculture is responsible for promulgating standards for basic agricultural commodities. Apart from these, there are other agencies like EIA, which specify standards for export oriented commodities.
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Forms of Derivatives are Futures, Forwards and Options.

Forward contracts
A forward contract is one to one bi-partite contract, to be performed in the future, at the terms decided today. (E.g. forward currency market in India).
Forward contracts offer tremendous flexibility to the parties to design the contract in terms of the price, quantity, quality (in case of commodities), delivery time and place. Forward contracts suffer from poor liquidity and default risk.
Future contracts
Future contracts are organized/ standardized contracts, which are traded on the exchanges. These contracts, being standardized and traded on the exchanges are very liquid in nature. In futures market, clearing corporation/ house provides the settlement guarantee.
Options
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Option contracts give the holder the option to buy or sell the underlying at a pre-specified price some time in the future. An option to buy the underlying is known as a Call Option. On the other hand, an option to sell the underlying at a specified price in the future is known as Put Option. In the case of an option contract, the buyer of the contract is not obligated to exercise the option contract. Options can be traded on the stock exchange or on the OTC market. Options are instruments whereby the right is given by the option seller to the option buyer to buy or sell a specific asset at a specific price on or before a specific date. Option Seller - One who gives/writes the option. He has an obligation to perform, in case option buyer desires to exercise his option. Option Buyer - One who buys the option. He has the right to exercise the option but no obligation. Call Option - Option to buy. Put Option - Option to sell. American Option - An option which can be exercised anytime on or before the expiry date. European Option - An option which can be exercised only on expiry date. Strike Price/ Exercise Price - Price at which the option is to be exercised. Expiration Date - Date on which the option expires. Exercise Date - Date on which the option gets exercised by the option holder/buyer. Option Premium - The price paid by the option buyer to the option seller for granting the option.
PARTICIPANTS
1. HEDGERS
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As already observed, hedging (covering against losses) is the prime reason which led to emergence of derivatives. The availability of derivatives allows the undertaking of many activities at a substantially lower risk. Hedgers, therefore, are an important constituent of the traders in the derivatives markets. Hedgers are the traders who want to eliminate the risk (of price change) to which they are already exposed. They may take a long position on, or short sell, a commodity and would, therefore, stand to lose should the prices move in the adverse direction. It will be instructive to illustrate hedging with some examples. To begin with, suppose a leading trader buys a large quantity of wheat that would take two weeks to reach him. Now, he fears that the wheat prices may fall in the coming two weeks and so wheat may have to be sold at lower prices. The trader can sell futures (or forward) contracts with matching price, to hedge.
2.
Speculators
If hedgers are the people who wish to avoid the price risk, speculators are those who are willing to take such risk. These are the people who take positions in the market and assume risks to profit from fluctuations in prices. In fact, the speculators consume information, make forecasts about the prices and put their money in these forecasts. In this process, they feed information into prices and thus contribute to market efficiency. By taking positions, they are betting that a price would go up or they are betting that it would go down. Depending on their perceptions, they may take long or short positions on futures and/or options, or may hold spread positions (simultaneous long and short positions on the same derivative). In the absence of the derivatives, speculation activity would become very difficult as it might require huge funds to be invested. For example, if an investor believes that the price of a share is likely to rise substantially, then he would need a very large sum of money to buy the shares, keep them and sell them off when the price rises.
3. Arbitrageurs
Arbitrageurs thrive on market imperfections. An arbitrageur profits by trading a given commodity, or other item, that sells for different prices in different markets. The definition of arbitrage can be given in this manner: Simultaneous purchase of securities in one market where the price thereof is low and sale thereof in another market, where the price thereof is comparatively higher. These are done when the same securities are being quoted at different prices in the two markets, with a view to make a profit and carried on with the conceived intention to derive advantage from difference in prices of securities prevailing in the two markets. Thus, arbitrage involves making risk-less profit by simultaneously entering into transactions in two or more markets. If a certain share is quoted at a lower rate on the Delhi Stock Exchange (DSE) and at a higher rate on the Ahmedabad Stock Exchange (ASE), for example, then arbitrageur would profit by buying the share at DSE and selling it at ASE. This type of arbitrage is arbitrage over space. With the introduction of derivatives trading, the scope of arbitrageurs activities extends to arbitrage over time.
Chapter 6
Forward Markets Commission (FMC)
Forward Markets Commission (FMC)

Forward Markets Commission (FMC) headquartered at Mumbai, is a regulatory authority which is overseen by the Ministry of Consumer Affairs, Food and Public Distribution,
Govt. of India. It is a statutory body set up in 1953 under the Forward Contracts (Regulation) Act, 1952. " The Act provides that the Commission shall consist of not less than two but not exceeding four members appointed by the Central Government out of them being nominated by the Central Government to be the Chairman thereof. Currently Commission comprises three members among whom Shri B.C. Khatua, IAS, is the Chairman, Shri Rajeev kumar Agarwal, IRS and Shri D.S.Kolamkar, IES are the Members of the Commission."
The functions of the Forward Markets Commission are as follows

(a) To advise the Central Government in respect of the recognition or the withdrawal of recognition from any association or in respect of any other matter arising out of the administration of the Forward Contracts (Regulation) Act 1952. (b) To keep forward markets under observation and to take such action in relation to them, as it may consider necessary, in exercise of the powers assigned to it by or under the Act. (c) To collect and whenever the Commission thinks it necessary, to publish information regarding the trading conditions in respect of goods to which any of the provisions of the act is made applicable, including information regarding supply, demand and prices, and to submit to the Central Government, periodical reports on the working of forward markets relating to such goods; (d) To make recommendations generally with a view to improving the organization and working of forward markets;
Chapter 7
Exchanges of India And World

CHAPTER CONTENTS
International Exchanges National Exchanges Regional Exchanges Commonly Traded Commodities
EXCHANGES OF INDIA AND WORLD

There are three exchanges below (1) International Exchanges (2) National Exchanes (3) Regional exchanges
LEADING COMMODITY MARKETS OF WORLD

S. No.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
Global Commodities Exchanges

New York Mercantile Exchange (NYMEX) London Metal Exchange (LME) Chicago Board of Trade (CBOT) New York Board of Trade (NYBOT) Kansas Board of Trade Winnipeg Commodity Exchange, Manitoba Dalian Commodity Exchange, China Bursa Malaysia Derivatives exchange Singapore Commodity Exchange (SICOM) Chicago Mercantile Exchange (CME), US London Metal Exchange Tokyo Commodity Exchange (TOCOM) Shanghai Futures Exchange Sydney Futures Exchange London International Financial Futures and Options Exchange (LIFFE) National Multi-Commodity Exchange in India (NMCE), India National Commodity and Derivatives Exchange (NCDEX), India Multi Commodity Exchange of India Limited (MCX), India Dubai Gold & Commodity Exchange (DGCX) Page 37
Regulators
Each exchange is normally regulated by a national governmental (or semi-governmental) regulatory agency: Country Australia Chinese mainland Hong Kong India Regulatory agencies Australian Securities and Investments Commission China Securities Regulatory Commission
Securities and Futures Commission Securities and Exchange Board of India and Forward Markets Commission (FMC) Securities and Exchange Commission of Pakistan Monetary Authority of Singapore Financial Services Authority Commodity Futures Trading Commission Securities Commission
Pakistan Singapore UK USA Malaysia
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NATIONAL EXCHANGES OF INDIA

S. No.
1
National Commodity exchanges
Multi Commodity Exchange (MCX), Mumbai

2
National Commodity and Derivatives Exchange Ltd (NCDEX), Mumbai
National Multi Commodity Exchange (NMCE), Ahmadabad
Multi Commodity Exchange of India Limited (MCX)

Multi Commodity Exchange of India Limited (MCX) is an independent and de-mutulized exchange with permanent reorganization from Government of India, having Head Quarter in Mumbai. Key share holders of MCX are Financial Technologies (India) Limited, State Bank of India, Union Bank of India, Corporation Bank of India, Bank of India and Canara Bank. MCX facilitates online trading, clearing and settlement operations for commodity futures market across the country. MCX started of trade in Nov 2003 and has built strategic alliance with Bombay Bullion Association, Bombay Metal Exchange, Solvent Extractors Association of India, pulses Importers Association and Shetkari Sanghatana.
National Commodities & Derivatives Exchange Limited (NCDEX)

National Commodities & Derivatives Exchange Limited (NCDEX) promoted by ICICI Bank Limited (ICICI Bank), Life Insurance Corporation of India (LIC), National Bank of Agriculture and Rural Development (NABARD) and National Stock Exchange of India Limited (NSC). Punjab National Bank (PNB), Credit Ratting Information Service of India Limited (CRISIL), Indian Farmers Fertilizer Cooperative Limited (IFFCO), Canara Bank and
Goldman Sachs by subscribing to the equity shares have joined the promoters as a share holder of exchange. NCDEX is the only Commodity Exchange in the country promoted by national level institutions. NCDEX is a public limited company incorporated on 23 April 2003. NCDEX is a national level technology driven on line Commodity Exchange with an independent Board of Directors and professionals not having any vested interest in Commodity Markets. It is committed to provide a world class commodity exchange platform for market participants to trade in a wide spectrum of commodity derivatives driven by best global practices, professionalism and transparency. NCDEX is regulated by Forward Markets Commission (FMC). NCDEX is also subjected to the various laws of land like the Companies Act, Stamp Act, Contracts Act, Forward Contracts Regulation Act and various other legislations. NCDEX is located in Mumbai and offers facilities to its members in more than 550 centers through out India. NCDEX currently facilitates trading of 57 commodities.
National Multi Commodity Exchange of India Limited (NMCEIL)

Multi Commodity Exchange of India Limited (NMCEIL) is the first de-mutualised Electronic Multi Commodity Exchange in India. On 25th July 2001 it was granted approval by Government to organize trading in edible oil complex. It is being supported by Central warehousing Corporation Limited, Gujarat State Agricultural Marketing Board and Neptune Overseas Limited. It got reorganization in Oct 2002. NMCEIL Head Quarter is at Ahmadabad.
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LIST OF REGIONAL EXCHANGES IN INDIA
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No. 1.
Exchange
COMMODITY
India Pepper & Spice Trade Pepper (both domestic Association, Kochi (IPSTA) and contracts) international
2.
Vijai Beopar Chambers Ltd., Muzaffarnagar
Gur, Mustard seed
3.
Rajdhani
Oils
&
Oilseeds Gur, Mustard seed its oil & oilcake
Exchange Ltd., Delhi 4.
Bhatinda Om & Oil Exchange Gur Ltd., Bhatinda
5.
The Chamber of Commerce, Gur, Hapur
Potatoes
and
Mustard seed
6.
The Meerut Agro Commodities Gur Exchange Ltd., Meerut
7.
The
Bombay
Commodity Oilseed
Complex,
Exchange Ltd., Mumbai 8.
Castor oil international seed,
contracts Rajkot Seeds, Oil & Bullion Castor Merchants Association, Rajkot
Groundnut, its oil & cake, cottonseed, its oil & cake, cotton (kapas) and RBD palmolein.
9.
The Ahmedabad Commodity Castorseed, Exchange, Ahmedabad cottonseed, its oil and oilcake
10.
The East India Jute & Hessian Hessian & Sacking Exchange Ltd., Calcutta
11.
The
East
India
Cotton Cotton
Association Ltd., Mumbai
12.
The
Spices
&
Oilseeds Turmeric
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Commonly Traded Commodities

METAL Aluminium, Copper, Lead, Nickel, Sponge Iron, Steel Long (Bhavnagar), Steel Long (Govindgarh), Steel Flat, Tin, Zinc Gold, Gold HNI, Gold M, i-gold, Silver, Silver HNI, Silver M Cotton L Staple, Cotton M Staple, Cotton S Staple, Cotton Yarn, Kapas Brent Crude Oil, Crude Oil, Furnace Oil, Natural Gas, M. E. Sour Crude Oil Cardamom, Jeera, Pepper, Red Chilli Arecanut, Cashew Kernel, Coffee (Robusta), Rubber Chana, Masur, Yellow Peas
BULLION FIBER ENERGY SPICES PLANTATIONS PULSES
PETROCHEMICALS HDPE, Polypropylene(PP), PVC OIL & OIL SEEDS Castor Oil, Castor Seeds, Coconut Cake, Coconut Oil, Cotton Seed, Crude Palm Oil, Groundnut Oil, Kapasia Khalli, Mustard Oil, Mustard Seed (Jaipur), Mustard Seed (Sirsa), RBD Palmolein, Refined Soy Oil, Refined Sunflower Oil, Rice Bran DOC, Rice Bran Refined Oil, Sesame Seed, Soymeal, Soy Bean, Soy Seeds Maize Guargum, Guar Seed, Gurchaku, Mentha Oil, Potato (Agra), Potato (Tarkeshwar), Sugar M-30, Sugar S-30
CEREALS OTHERS
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Chapter 8
History & introduction Of Crude oil
CHAPTER CONTENTS
History Overview Measurement Of Crude oil India and History of Crude oil Scenario of Crude oil
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India and Crude oil Market India and Production of Crude oil
History
The history of crude oil dates back to the 3rd or 4th century A.D when the presence of oil was first discovered in China. The oil that the early Chinese people found was found to have extremely good medicinal value and was used in the salt form. To extract that oil from under the earths crust, first oil wells of around 243 meters were dug up in that region with the help of bamboo poles possessing metal tools at their end. The crude oil was also used for the lighting purposes in Ancient Persia. When the city of Baghdad was constructed in the 8th century, the streets of that city were paved with tar that was easily available in the natural oil fields in that region. With the time, man discovered new and diversified uses of oil and hence the discovery of new oil fields became an important requirement. People got to know the vast amount of oil that was hidden under the earths surface as many geographers started predicting it in that time. All this time oil had a limited use until in 19th century; the process of distillation of kerosene with the help of coal and rock oil was invented. Production of oil became commercialized and it started an era of establishment of oil refineries throughout the world. One of the first refineries was established at Baku in Russia and it became the worlds largest oil producing refinery. A Russian engineer F.N Semyonov built the first ever modern oil well at the same place in 1848. Up till 1950s coal had dominance among the primary energy constituents but crude oil took over the leadership in a short span of time and has still maintained its reputation.
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Overview
Oil is the single most important commodity that holds the position of a key factor in each and every economy of the world. The worlds richest nations are at their current positions just because of the oil factor. The importance of oil has reached such a level at which there is no country in the world, which doesnt need oil and its by-products, and if somehow it doesnt have much reserves of oil to meet their domestic demand, these nations are ready to import the product at any cost. Many nations have a huge share of their earnings constituted by oil exports only. Every industry requires oil to function properly either directly or indirectly as both crude oil and its by-products serve as their inputs. The extent of the commoditys importance was shown to the world when the worlds most strong economies were shaken up as the oil prices shot up in 1973 and 1979 when the gulf countries refused to supply oil to the countries that were the supporters of Israel in its war with Egypt and Syria.
Crude oil alone bears 60% share to meet the global energy needs in the current scenario. The reason for this high share in the primary energy consumption in the world is due to the advantages that oil has over the other constituents of primary energy such as diverse application, comparatively lesser harm to the environment, easy handling, lower capital costs and above all higher efficiency. Crude oil reserves on earth are estimated to be more than 1 trillion barrels that are mostly found in the Middle East, Eastern Europe, Africa and Central America, Middle East being the top reserve holder. It is a clear fact that oil is a limited resource and would finish off in a maximum of 80 years if the current rate of consumption
continues. Of these 1 trillion barrels, the world produces around 75 million barrels per day. The largest crude oil producing country is Saudi Arabia followed by Russia and United States of America. The refining capacity of oil in the world as in 2002 was 4166 million tons. The consumption of crude oil in the world has been rising with the change in time and the technological improvements that are accompanying it. Oil is consumed all over the globe, consumption figures standing at 76 million barrels per day and United States of America consumes the maximum level of oil in the world. The major consumer countries of crude oil along with their consumption figures pertaining to the year 2008 are United States of America (20.7 million barrels/day) China (6.5 million barrels/day) Japan (5.4 million barrels/day) Germany (2.6 million barrels/day) Russia (2.6 million barrels/day) India (2.3 million barrels/day) Canada (2.3 million barrels/day) Brazil (2.2 million barrels/day) South Korea (2.1 million barrels/day) France (2.0 million barrels/day) Mexico (2.0 million barrels/day)
Regarding the world trade situation, one important aspect is the presence of an organization namely OPEC that controls and regulates the exports and imports of most of the countries of the world. OPEC stands for Organization of Petroleum Exporting Countries and the members include all the 11 major crude oil producing countries and nations that are highly dependent on the revenues from oil and oil products. As a matter of fact, OPEC nations have 75% of the worlds total crude oil reserves of 1 trillion barrels and control around 40% of the world oil production. OPEC member countries also dominate the world exports of crude oil contributing to 55% of the total world exports. The major crude oil exporting countries with their exporting figures are Saudi Arabia* (8.73 million barrels per day) Russia (6.67 million barrels per day) Norway (2.91 million barrels per day) Iran* (2.55 million barrels per day) Venezuela* (2.36 million barrels per day) United Arab Emirates* (2.33 million barrels per day) Kuwait* (2.20 million barrels per day) Nigeria* (2.19 million barrels per day)
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Mexico (1.80 million barrels per day) Algeria* (1.68 million barrels per day) Iraq* (1.48 million barrels per day) Libya* (1.34 million barrels per day) Kazakhstan (1.06 million barrels per day) Qatar* (1.02 million barrels per day)
In the above list, the countries with the * sign are the member countries of OPEC. The imports of crude oil are generally done by the countries, which do not have appropriate reserves of oil and are incapable of satisfying the domestic consumption demand. The following is list of the countries with their net import figures that are the major importers of crude oil in the world

United States of America (12.1 million barrels per day) Japan (5.3 million barrels per day) China (2.9 million barrels per day) Germany (2.4 million barrels per day) South Kora (2.2 million barrels per day) France (1.9 million barrels per day) Italy(1.7 million barrels per day) Spain (1.6 million barrels per day) India(1.5 million barrels per day) Taiwan (1.0 million barrels per day)
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Measurement of Crude Oil

Crude oil is measured in barrels. When crude oil first came into large-scale commercial use in the United States in the 19th century, it was stored in wooden barrels. One barrel equals 42 US gallons, or 159 litres. In some cases crude oil is also measured in tons. The number of barrels contained in each ton varies depending on the type and specific gravity of each crude; however the average number considered would be around 7.33 barrels per each ton.
Crude Oil Units (average gravity)

1 US barrel = 42 US gallons 1 US barrel = 158.98 litres 1 tonne = 7.33 barrels 1 short tonne = 6.65 barrels
India and History of Crude oil

India was not known to the world in the context of crude oil and its by-product production. As late as in 1889, the presence of oil in India was discovered in Digboi in Assam. First crude oil refinery in India was set up in Digboi in1901. Then the exploration and production activities were limited to the North Eastern part of the country. In 1958 and 1974, two more places for crude oil production were identified namely Cambay onshore basin and Bombay offshore basin. Initially the major international companies were given the job to explore and produce oil in the country but after the shock in oil prices in 1973, whole of the sector was nationalized.
Scenario of crude oil

Global Scenario: Oil accounts for 40 per cent of the world's total energy demand.
The world consumes about 76 million bbl/day of oil.
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United States (20 million bbl/d), followed by China (5.6 million bbl/d) and Japan (5.4 million bbl/d) are the top oil consuming countries. Balance recoverable reserve was estimated at about 142.7 billion tons (in 2002), of which OPEC was 112 billion tons. OPEC stands for 'Organization of Petroleum Exporting Countries'. It is an organization of eleven developing countries that are heavily dependent on oil revenues as their main source of income. The current Members are Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.
OPEC controls almost 40 percent of the world's crude oil. It accounts for about 75 per cent of the world's proven oil reserves. Its exports represent 55 per cent of the oil traded internationally.
Indian Scenario
India ranks among the top 10 largest oil-consuming countries.
Oil accounts for about 30 per cent of India's total energy consumption. The country's total oil consumption is about 2.2 million barrels per day. India imports about 70 per cent of its total oil consumption and it makes no exports.
India faces a large supply deficit, as domestic oil production is unlikely to keep pace with demand. India's rough production was only 0.8 million barrels per day. The oil reserves of the country (about 5.4 billion barrels) are located primarily in Mumbai High, Upper Assam, Cambay, Krishna-Godavari and Cauvery basins Balance recoverable reserve was about 733 million tons (in 2003) of which offshore was 394 million tones and on shore was 339 million tons.
India had a total of 2.1 million barrels per day in refining capacity. Government has permitted foreign participation in oil exploration, an activity restricted earlier to state owned entities. Indian government in 2002 officially ended the Administered Pricing Mechanism (APM). Now crude price is having a high correlation with the international market price. As on date, even the prices of crude bi-products are allowed to vary +/- 10%
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keeping in line with international crude price, subject to certain government laid down norms/ formulae. Disinvestment/restructuring of public sector units and complete deregulation of Indian retail petroleum products sector is under way.
India and Crude oil Market

India is one of the non-OPEC countries much dependent on its imports to fulfill the domestic consumption demand as it has a much lower level of production. India is a developing country and the requirement for the oil as a primary energy constituent from the industries in the country is at its peak. The country has much depended on coal to satisfy its energy needs
in the earlier times but the use of crude oil and gas is taking over the dominance of coal with the change in time. Oil and gas contribute to around 45% of the countrys total energy consumption. India has around 5.4 billion barrels of oil reserves with it and the domestic production has increased in the recent past to reach the 0.8 million barrels per day mark. Mumbai high is the largest oil-producing oilfield in India with a production of 2.6 lakh barrels per day. The refining capacity of crude oil in India is estimated at around 2.1 million barrels per day. Regarding the consumption pattern of oil in India, it is the 6th largest consumer country in the world having a consumption of 2.2 million barrels per day. This leaves the country with a huge deficit in the demand-supply scenario and thus 70% of the consumption is met through imports. India generally imports Oman-Dubai sour grade crude, Brent dated sweet crude and Bonny light crude. The country imports over 1.5 million barrels per day that place it at the 9th position among the largest importers of the world. Though the Indian production has increased in the recent times, the imports were raised by 5% making due to the raised Indian demand of around 4.2%. The countries from which India imports crude oil are Venezuela Nigeria Sudan Iran Kuwait
The Indian oil-refining sector has been regulated by the government historically and is still dominated. A new private sector has emerged after the loosening of control by the government. The major units pertaining to the oil sector in India are Indian Oil Corporation (Public sector) Oil and Natural Gas Corporation (Public sector) Reliance India Ltd (Private sector) Essar Oil Refinery (Private sector) Bharat Petroleum Corporation Ltd (Public sector) Hindustan Petroleum Corporation Ltd (Public sector) Manglore Refineries and Petrochemicals Ltd (Public sector)
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India and production of crude oil

India is not among the major producers of crude oil, as it doesnt have much oil reserves. That is why it generally depends on imports of crude oil from other countries. However, the production of oil and as a result the production of its by-products in India has increased in the recent past due to exploration and findings of new oil reserves. India currently has an estimated quantity of 5.4 billion barrels of oil reserves out of which it produces around 0.8 million barrels per day. At this production level, the oil reserves in India would last for around 29 years. The major oil reserves of the country are situated at Mumbai high (Mumbai) Upper Assam (Assam) Cambay (Gujarat) Krishna-Godavari basin (Andhara Pradesh) Cauvery basin (Tamil Nadu) Nagaland
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Arunachal Pradesh
The largest crude oil producing oilfield is the Mumbai high field that produces around 260000 barrels per day. Among these production centers, major share of production i.e. 2/3rd share is bagged by the offshore reserves as compared to onshore reserves. The refining capacity of crude oil in India is over 2.1 million barrels per day. The refining sector in India is held by both public and private sector, public sector being the dominating one.
Chapter 9 Fundamental Analysis

CHAPTER CONTENTS

Crude oil - Theorical Aspect Crude oil Pratical Aspect Demand Supply Reserves Production Consumption Import Export Inventories
Crude oil - Theorical Aspect

(1) Theoretical analysis
Crude oil is one of the main natural feed stocks used to meet energy demands of mankind. That is why its price variation has great influence on the society development. The prognoses of volume of crude oil extraction globally and regionally, consumption rates, and the crude oil price are used not only for planning the national and world economies but also for development of refining enterprise investment programmers. The world economy has expanded at its fastest pace in decades, and that strong growth has translated into substantial increases in the demand for oil, particularly from emerging market countries. On the supply side, the production of oil has responded sluggishly, compounded by production shortfalls associated with geopolitical unrest in countries with large oil reserves.
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As it is very difficult to rely on substitutes for oil in the short term, very large price increases have occurred as the market balances supply and demand. Recent crude oil price increases are an extension of oil market developments originating in the 1990s. At that time, relatively high inventories and ample surplus production capacity served to limit oil price fluctuations. When spot market prices moved up or down, futures contracts requiring delivery in distant months generally traded close to $20 per barrel, consistent with a market expectation that producers would ensure that spot prices would eventually return to that level. However, as leading OPEC members shifted toward a tight inventory policy and global oil demand recovered from the slowing effect of Asias financial crisis, the global market balance tightened and inventories declined sharply at the beginning of the present decade. Oil prices rise to $30 per barrel in what might be seen as the first leg of the upward trend. By 2003, inventories were drawn down sufficiently such that subsequent increases in global demand stretched oil production to levels near capacity. The large, unexpected jump in world oil consumption growth in 2004, fostered by strong growth in economic activity in Asia, reduced excess production capacity significantly. In mid-2008, despite high prices, world oil consumption growth remains strong, overall nonOPEC production growth continues to slow, and OPEC oil production has not grown sufficiently to fill the gap. In addition, geopolitical risks create considerable uncertainty about future supplies. Key factors affecting the crude oil price Growing population and economic output are the key drivers for increased energy demand.
Increased cost of finding and developing oil.
Price Movement of Crude Oil over shorter term

It is very difficult to estimate the price movement of the crude oil over very short term. However if any estimates are to be made, the closest indicator can be the preceding inventory data.
Price Movement of Crude Oil over medium term

Over medium term we can get a rough estimate based on the yields, performance of other asset classes. This is due to the movement of money flow across assets. Inflation prediction is also good way as Crude is one of the important factor in inflation index.
Price Movement of Crude Oil over long term

This is the safest bet. Over long term horizon, over a period of more than 10 years, crude oil does follow the growth in world GDP and resulting energy demand. To be more precise, it follows the crude oil dependence out of the total energy demand. Thus, proving the old war house of supply and demand true over a longer period. In shorter term, the one off events do create euphoria or panic thus bringing in strong price movements, which could be termed as irrational exuberance and can be left to be analyzed and debated further.
Crude oil pratical aspect Practical analysis

Factor affecting fundamental analysis of crude oil:There are various factor affecting of crude oil (1) Demand (2) Supply (3) Reserves (4) Production (5) Consumption (6) Import (7) Export (8) Inventories
(1)
Demand
The key driver of oil demand has been robust global economic growth, particularly in emerging market economies, world gross domestic product (GDP) growth (with countries weighted by oil consumption shares) has averaged close to 5 percent per year since 2004, marking the strongest performance in two decades.
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In addition to the pace of world economic activity, oil demand has been further supported by the composition of growth across countries. China, India, and the Middle East use substantially more oil to produce a dollars worth of real output than the United States. These economies are among the fastest growing in the world; together they have accounted for nearly two-thirds of the rise in world oil consumption since 2004. Moreover, these economies still consume relatively little oil on a per capita basis. Over the longer term, as these economies continue to develop and incomes rise, per capita energy use is likely to increase further.
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Per capita oil consumption:In united states was oil consumption per capita is very high as compare to another countries approximately 25(barrels per person) and middle east countries consumption is approximately 9.0barrels per person and china was oil consumption approximately 2 barrels per person and india was very low oil consumption approximately 1.0 barrels per day. Countries US Middle east China India Barrels of oil per person annually 25 9 1.5 1.0
Increasing Consumption
The rise in global economic activity has been accompanied by corresponding growth in world oil consumption. Since 2003, world oil consumption growth has averaged 1.8 percent per year, representing an estimated 1 million barrels per day in 2008. Non-member countries of the OECD, especially China, India, and the Middle East, represent the largest part of this growth Despite higher prices, growth in world oil consumption remains strong. Crude oil demand is increasing and will keep up on the increasing following years. The total global sale of crude oil in the financial year 2002/2003 was 475 million liters at a price of $48 per barrel. In the following year the demand kept increase despite rise of price. In the financial year 2003/2004, a 541 million liter crude oil was sold at a price of $48 per barrel.
And in 2004/2005 the sales increase to 579 million liter at a price of $70 per barrel the demand kept increasing in the following year, however there is a limited supply of crude oil, 2005/2006, 743 million liter of crude oil was sold at a $88 per barrel. And 2008 year demand of crude oil was increase 747 million liters. And year 2009 demand of crude oil was increase 769 million liters. And year 2010 approxmately demand grow up785 million liters. So day by day crude oil demand increase.
there is two major countries are US , China and other country are consumption oil in daily, in year of 2003 crude oil consumption growth is 1.6 million barrels per day. In year of 2004 world oil consumption is 2.7 million barrels per day and increase by 168%. But in next year world oil consumption is down trend and in year 2005 oil consumption was 1.3 million per barrels per day and decrease by previous year. And year 2006 oil consumption was 1.0 million barrels per day and decrease by previous year. In year of 2007 world oil consumption was 0.8 million barrels per day and also decrease previous year. But estimated year in 2008 also crude oil consumption is increase1.0 million barrels per
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Oil Consumption Growth by Country
In oil consumption growth by country chine was lead in another countries china oil consumption growth is 2.44 and Saudi Arabia was second position in oil consumption growth rate was 0.71 and India was third position in oil consumption growth rate was 0.46 and iran growth rate was 0.39 and united states growth rate was 0.37, brazil growth rate was 0.31, Russia growth rate was 0.26, Iraq growth rate was 0.20, Canada growth rate was 0.15, in last Singapore growth rate was 0.15. these all are the oil consumption growth (millions of barrels per day).
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Supply
Stagnant Production
While global demand has remained strong, overall non-OPEC production growth has slowed. In the past three years, non-OPEC production growth has been well below rates seen earlier this decade. World oil consumption growth has simply outpaced non-OPEC production growth every year since 2003. This imbalance increases reliance upon OPEC production and/or inventories to fill the gap. However, since2003, OPEC oil production has grown by only 2.4 million barrels per day while the call on OPEC(defined as the difference between world consumption and non-OPEC production) increased by 4.4million barrels per day. As a result, the world oil market balance has tightened significantly.
Non OPEC supply growth
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International crude oil supply

Million barrels per day Supply countries OECD US(50) Canada Mexico North sea OPEC Former soviet union China 2008 20.92 8.51 3.35 3.19 4.3 35.70 12.53 3.98 2009 20.95 9.05 3.27 3.00 4.08 33.88 12.9 3.99 2010 20.70 9.33 3.35 2.75 3.72 34.89 13.15 4.07
OPEC is a leader in the crude oil supply. OPEC was supply crude oil in 2008 year just around 35.70 million barrel per day. But in next year OPEC taken a decision cut off production in this year so slow down supply in year of 2009 but in next year OPEC was increasing supply of crude oil just around 34.89 Mbp/d .second largest crude oil suppliers OECD. OECD was supply crude oil in year 2008 just around 20.92 mbp/d. in next year OCED was supply almost same in year 2009 and, year 2010 OCED was supply decrease level 20.70mbp/d its minor decrease in supply. And third largest crude oil supplier is former Soviet Union. FSU was supply of crude oil just around 12.53mbp/d in year 2008 and, in year 2009 FSU was increase supply of crude oil just around 12.9mbp/d and, last year 2010 FSU was supply of crude oil 13.15mbp/d. and many countries supply of crude oil. But all market captures these countries in the world.
Market balance should loosen as demand growth slow and non- OPEC supply growth increase
in first four quarter was world oil consumption growth high but non opec production growth was very low. But next six quarter was world oil consumption growth was up-down situation
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but next six quarter non-opec production growth is increase level so non-opec production growth was increase but world oil production growth is decrease level. World distribution of oil>>Status of the world oil supply:The first 200,000,000,000 barrels of world oil were produced in 109 years from 1859 to 1968. Since that time world oil production rates have stabilized at a rate of about 22,000,000,000 barrels a year. The table indicates that the most likely total world oil endowment is about 2,390,000,000,000 barrels. Of this amount, 77 percent has already been discovered and 30 percent has already been produced and consumed. If this estimate proves to be reasonably accurate, current relatively stabilized world oil-production volumes could be sustained to about the middle of the 21st century, at which time a shortage of conventional oil resources would force a production decline.
Reserves
The Middle East is thought to have had an estimated 41 percent of the worlds total oil endowment. North America is a distant second but has already produced almost half of its total oil. Eastern Europe, because of the large deposits in Russia, is well endowed with oil. Western Europe is not, with most of its oil under the North Sea. Likewise, Africa, Asia, and South America are thought to have only relatively moderate amounts of oil. It is interesting to note that a large undiscovered oil resource is believed to exist in North America, which has many frontier basins. Both the Middle East and Eastern Europe, however, are also thought to contain significant oil prospects.
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Reserves of crude oil countries

Countries Saudi Arabia Canada Iran Iraq Kuwait Venezuela UAE Russia Libya Nigeria Kazakhstan Reserves ( billon barrels ) 259.9 175.2 137.6 115.0 101.5 99.4 97.8 60.0 44.3 37.3 30.0
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This is data of reserves of crude oil there are Saudi Arabia is leader in the crude oil reserves in the world. In Saudi Arabia 259.9 billion barrels reserves in the worlds. And a second largest crude oil reserve is the Canada. This country crude oil reserves is 175.2 billion barrels. Third largest crude oil reserve is Iran. This country crude oil reserves are 137.6 billion barrels. 4th 5th 6th 7th ranked countries crude oil reserves are respectively 115.0, 101.5, 99.4, 97.8 billion barrels. 8th 9th 10th 11th countries crude oil reserves are respectively 60.0, 44.3, 37.2, 30.0 billion barrels. Assumption Last four countries crude oil reserves will come lower level so next 15 year this four countries crude oil reserves is empty. 4th 5th 6th 7th countries crude oil reserves will come lower level after 15 years. And first three countries crude oil reserves will come lower level after 35 years.
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Production of crude oil

OPEC COUNTRIES PRODUCTION Middle east was production of crude oil 23 million per barrels per day, and in future year 2030 should be increase by 32 million per barrels per day. So year to year increase in crude oil production. West Africa was production of crude oil 4.0 million per barrels per day, and in future year 2030 should be increase 6.0 million per barrels per day. North Africa was production of crude oil 4.0 million per barrels per day, and in future year 2030 should be increase 5.5million per barrels per day. South America was production of crude oil 3.0 million per barrels per day , and in future year 2030 should be increase 3.1 million per barrels per day. Asia was production of crude oil 1.2 million per barrels per day but in future in year 2030 should be decrease 1.1 million per barrels per day
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NON-OPEC COUNTRIES PRODUCTION:-
Russia was top of the crude oil production in year 2005, Russia was production of crude oil 9.0 million per barrels per day in year 2005, and in future Russia should be production of crude oil increasing 13.7million per barrels per day. United states was crude oil production 8.1 million barrels per day and, in future United states should be increase in production of crude oil in year 9.9 million per barrels per day. Asia was production of crude oil 7.6million per barrels per day and, in future Asia should be produce crude oil 7.95 million per barrels per day. North sea was production of crude oil in year 2005 4.4 million per barrels per day, in future 2030 North sea should be produce crude oil 2.1 million per barrels per day, because of in north sea crude oil reserve is decline level so in future crude oil production is decrease in North sea. Central south America was produce crude oil in year 2005 4.95 million per barrels per day but in future 2030 Central south America should be produce crude oil 8.0 million per barrels per day. And last Other non opec countries was produce crude oil in year 2005 6.3 million per barrels per day but in year 2030 other non opec countries should be produce crude oil 5.75 million per barrels per day. So day by day crude oil demand is increase for developing country and developed country and day by day crude oil production is increase so many problem face in future for developed country and developing country and crude oil price increase and increase so ultimately affecting for developing country and go down economy
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MAJOR OIL PRODUCERS OF THE WORLD:(Thousand barrels per day) Countries Saudi Arabia Russia United states Iran China Mexico Canada United Arab emirates Kuwait Venezuela Producers 10782 9790 8514 4174 3973 3350 3186 3046 2741 2643
Major oil-producing countries

Saudi Arabia Saudi Arabia, shown in is thought to have had the largest original oil endowment of any country. The discovery that transformed Saudi Arabia into a leading oil country was the Al-Ghawr field. Discovered in 1948, this field has proved to be the worlds largest, containing 82,000,000,000 barrels. Another important discovery was the Saffnyah offshore field in the Persian Gulf. It is the third B.M. COLLEGE OF BUSINESS ADMINISTRATION Page 71
OVERVIEW Of COMMODITY MARKET AND FUNDAMENTAL ANALYSIS OF CRUDEOIL largest oil field in the world and the largest offshore. Saudi Arabia has eight other supergiant oil fields. Thus, it has the largest oil reserve in the world, not to mention significant potential for additional discoveries.
Russia Russia is thought to possess the best potential for new discoveries. Also, it has significant reserves. Russian oil is derived from many sedimentary basins within the vast country, while Saudi Arabian fields, as well as many other Middle Eastern fields, are located in the great Arabian-Iranian basin ( and 3). Russia has two supergiant oil fields, Samotlor and Romashkino. Production from these fields is on the decline, bringing total Russian oil output down with them. The best prospects for new Russian discoveries appear to exist in the difficult and expensive frontier areas. United States, Mexico, and Canada levels well into the 21st century. Conversely, Canada, with considerably smaller oil reserves and most of its undiscovered resource potential in remote regions, is unlikely to North America also has many sedimentary basins; they Basins in the United States have been intensively explored and their oil resources developed. Cumulatively, the United States has produced more oil than any other country but is still considered to have a significant remaining undiscovered oil resource. Prudhoe Bay, which accounted for approximately 17 percent of U.S. oil production during the mid-1980s, is in decline. Mexico has produced only about one-fifth of its estimated total oil endowment. With two supergiant fields (Cantarell offshore of Campeche state and Bermudez in Tabasco state) and with substantial remaining reserves and resources, it will be able to sustain current production be able to sustain current production levels beyond the 1990s. Canadas largest oil field is Hibernia, discovered off Newfoundland in 1979. This giant field has yet to be developed. Iraq, Kuwait, and Iran The Middle Eastern countries of Iraq, Kuwait, and Iran are each estimated to have had an original oil endowment in excess of 100,000,000,000 barrels. These countries have a number of supergiant fields, all of which are located in the Arabian-Iranian basin, including Kuwaits Al-Burqn field (). Al-Burqn is the worlds second largest oil field, having originally
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contained 75,000,000,000 barrels of recoverable oil. Iraq possesses a significant potential for additional oil discoveries
Consumption crude oil by countries

Countries United state China Japan India Russia Consumption bbl/d 19,498,000 7,831,000 4,785,000 2,962,000 2,916,000
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Germany Brazil Saudi Arabia canada Korea
2,569,000 2,485,000 2,376,000 2,261,000 2,214,000
The U.S. accounts for more than 25% of global daily demand. U.S. oil imports have increased steadily since the 1970s and net imports now account for 66% of total U.S. oil consumption. Transportation accounts for 67% of U.S. oil consumption. 97% of transportation in the U.S. is fueled by oil, with little or no substitutes Crude oil consumption by sector
U.S. and world demand for oil is expected to increase substantially going forward. By 2025, U.S. demand is expected to grow 24% (from 21 to 26 million barrels per day) and world demand is projected to increase33% (from 84 to 110 million barrels per day). Demand in China and India will increase 98% during this period.
Crude oil importers

Countries United state Japan China Germany Korea, south India France Spain Italy Taiwan
Importers bbl/d 10,984,000 4,652,000 3,858,000 2,418,000 2,144,000 2,078,000 1,915,000 1,534,000 1,477,000 939,000
United States is the largest crude oil importers in the world. US most of use of crude oil in transportation sector. Japan and china is 2nd and 3rd largest crude oil importers in the world. India is six largest crude oil importers in the world. India spent money 45% every year for our balance of payment. Indian crude oil consumption day by day increase in the world and India is a developing country and spending 45% money for crude oil so, so many affect in country some like per-capita income, GDP growth, inflation rate etc. affect our country.
Crude oil Exporter countries

Countries Saudi Arabia Russia United Arab emirates Iran Kuwait Norway Angola Exporters barrel per/day 8,406,000 6,874,000 2,521,000 2,433,000 2,390,000 2,246,000 1,948,000
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Venezuela Algeria Nigeria
1,893,000 1,888,000 1,883,000
Main crude oil exporter are first two countries Saudi Arabia and Russia this two countries. Respectively 8406000 and 6874000 barrels per/day exports crude oil all over the worlds. This two countries more than 62% crude oil exports in overall world. And next four countries export crude oil near about 2,400,000 barrels per/ day in the world. And last four countries export crude oil near about 1,850,000 barrels per/day in the world.
Inventories
OECD stocks were at record lows in 2003, following a major strike by oil workers in Venezuela. Preliminary OECD inventory data for the first part of 2008 shows that OECD stocks have again fallen below levels seen in 1996-2002. Because oil use has been growing over time, inventories are even tighter when considered on a days of supply basis (defined as dividing inventories by the level of consumption).In addition, U.S. inventories for crude oil and key petroleum products are relatively low. After remaining relatively high for much of 2006 and the first half of 2007, U.S. crude oil inventories have fallen toward the bottom end of the average range. Crude oil and petroleum product stocks in other OECD regions exhibit the same declining trend.
Geopolitical Uncertainty
There is currently a high degree of uncertainty in world oil markets due to fears about the adequacy of oil supplies in the future. Current world oil supplies are highly concentrated, and much of those supplies are held by nations that limit access to private investment, thereby preventing full development of production through enhanced expertise and technology. In 2007, the top 10 oil producers represented about half of total world production. In addition, geopolitical risk surrounds many of these top producers, either because of current supply disruptions (Iraq, Nigeria) or the perceived threat of a disruption (Iran, Venezuela). Finally,
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as noted previously, there is little surplus production capacity available to offset any disruption. Supply disruptions are a frequent occurrence in the oil industry. During the past 24 months, there have been almost two dozen supply disruptions, lasting from a few days to many weeks, which affected world oil production and exports. These disruptions were caused by power failures, worker strikes, pipeline leaks and explosions, cyclones and hurricanes, saboteurs, and civil wars. More than half of these disruptions resulted in oil production outages exceeding 100,000 barrels per day. The most significant of these to oil markets resulted from the ongoing strife in Iraq and Nigeria. These disruptions have varied in size over time, with Iraq losing more than 500,000 barrels per day of exports in March 2008 and Nigeria reaching more than 1.4 million barrels per day of shut-in production at one point in April 2008. Actual supply disruptions directly affect world oil markets due to a loss of physical barrels available to the market. Concern over the impact of potential supply disruptions is reinforced by the limited amount of spare production capacity available. As long as potential disruptions, either realized (as in Iraq and Nigeria) or perceived (as in concerns about the potential loss of supply from Iran), exceed the amount of additional production capacity that can be brought online quickly, geopolitical concerns will weigh heavily on oil markets.
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Chapter 10 Macroeconomic Variables
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CHAPTER CONTENTS
Exchange rates Interest rates
Macroeconomic Variables
1) Exchange Rates
The relationship between exchange rates and oil prices is complex, and the causality can run both from exchange rates to oil prices and from oil prices to exchange rates. Typically, a depreciation of the dollar would be expected to lead to a rise in the dollar price of oil. As oil is priced in dollars, a lower exchange value of the dollar reduces the foreign-currency price and thus boosts demand. To clear the market, the dollar price of oil must then rise, assuming (reasonably) that supply is not perfectly elastic. Empirical studies do not reveal a clear, precisely estimated relationship between oil prices and the exchange value of the dollar. The available evidence suggests that oil prices respond approximately proportionately to changes in the dollar when all other economic factors are held constant. In other words, a 10 percent depreciation of the nominal, trade-weighted, multilateral exchange value of the dollar is associated with a 10 percent rise in the dollar price of oil when other factors are held constant. That finding suggests that the depreciation of the dollar since 2002 has contributed to the rise of the dollar price of oil, but can explain only a portion of the overall run-up.
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An additional linkage between exchange rates and oil prices may arise through the production decisions of key oil exporters. Oil exporters suffer a decline in the purchasing power of their revenues when the dollar depreciates. To defend their international purchasing power, these producers could, in principle, seek an offsetting increase in the dollar price of oil by curtailing supply. Shocks specific to the oil market can also feed back into exchange rates. As the United States is both a major producer and consumer of oil, increases in oil prices tend to lead to depreciations against the currencies of major oil exporters and appreciations against the currencies of major oil importers. Empirically, these bilateral exchange rate movements often tend to cancel out, resulting in little net change in the multilateral value of the dollar. During the past few years, however, the nominal value of U.S. oil imports has soared, resulting in a significantly wider trade deficit than would have otherwise occurred. This widening may have exacerbated concerns about the sustainability of the current account deficit, thereby putting downward pressure on the dollar.
2) Interest Rates
The relation between interest rates and oil prices can vary, as it depends on the interactions of many economic variables. A decline in interest rates by itself might be expected to raise oil prices to some extent, suggesting a negative correlation between these two variables. But if the decline in interest rates is in reaction to a downturn in economic activity, oil prices may very well fall in response to that weaker demand, resulting in a positive correlation. One mechanism by which declines in interest rates could push up oil prices is through a reduction in the costs associated with storing oil and other commodities. An implication of this hypothesis is that inventories of oil should tend to rise when interest rates decline. Another channel through which lower U.S. interest rates could drive up oil prices is by leading to excessively expansionary policies and faster increases in oil demand in countries that peg their currencies to or manage their currencies against the dollar. In the current setting, the stance of monetary policy in the United States, which has come in response to concerns about the domestic economic outlook, may not be appropriate for many fast-growing, commodity-intensive economies. In practice, however, much uncertainty surrounds the extent to which foreign central banks have matched U.S.
monetary policy moves, the effect of this on foreign economic growth, and its ultimate influence on commodity prices.
Chapter - 11 Oil Shocks

CHAPTER CONTENTS
Movements in Price The Economic Impact of oil Shocks, Past and Present 1973-75 Opec Squeezes the west
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1979-81Iranian Revolution and Iran Iraq war 1990-91 Iraq invades Kuwait and first Gulf war 1996-99 demand-induced price surge 2002-05 iraq II and surging oil demand Petrol dollar scam
Crude Oil Crisis

Oil prices shocks have a stag factionary effect on the macro economy of an oil importing country: they slow down the rate of growth (and may even reduce the level of output i.e. cause a recession) and they lead to an increase in the price level and potentially an increase in the inflation rate. An oil price hike acts like a tax on consumption and, for a net oil importer like the United States, the benefits of the tax go to major oil producers rather than the U.S. government. The size of the shock, both in terms of the percentage increase in oil prices and the real Price. The shocks persistence The dependency of the economy on oil and energy The policy response of monetary and fiscal authorities
MOVEMENTS IN PRICES:The price of oil has fluctuated widely over the past 50 years. Before 1973, prices were Effectively dictated by a buyers cartel of major global oil companies (the so-called Seven Sisters). The first oil shock occurred when members of the Organization of Petroleum
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Exporting Countries (OPEC), acting partly in response to the United States support for Israel in the 1973 Yom Kippur war, agreed to control oil supplies and raised prices fourfold. Oil prices stabilized in the late 1970s, before rising to a new peak with the outbreak of war between Iraq and Iran in 1981. The peak was short-lived and prices generally declined in real terms over the next twenty years, with the exception of a brief up turn associated with the 1991 Gulf War. By 1999, the oil price fell as low as $13/barrel, equivalent in real terms to the price prevailing before 1973. Prices began to recover in 2000, initially responding to cutbacks in OPEC output and then to strong global demand, particularly from the United States and China. The price of$60/barrel currently prevailing, and expected, on the basis of futures prices, to persist through 2006, is well above that observed for most of the period and comparable only to the short-lived peak of 1981.
THE ECONOMIC IMPACT OF OIL SHOCKS, PAST AND PRESENT The oil shocks of 1973, 1981 and 1991 all coincided with recessions in the United States. In these circumstances, it is not surprising that the recent increase in the price of oil should raise concerns about the possibility of a new recession In reality, however, the significance of the relationship between oil prices and macroeconomic activity has been overstated.
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1973-75 OPEC SQUEEZES THE WEST:In the background was a long period of OPEC frustration that constant oil prices, against the backdrop of rising global inflation were resulting in steady decline in real oil revenues The responsiveness of oil prices to macroeconomic shocks is clear in the case of the original 1973 oil shock. An inflationary upsurge was well under way by the time OPEC oil ministers met in October 1973. Wage and price controls had been imposed in the United States in 1971, but had broken down by early 1973the oil shock merely administered the coup de grace, leading to the final abandonment of controls. Prices of all kinds of commodities were skyrocketing, and monetary policy was being tightened in response, making a decline into recession inevitable. Because of the cartelized nature of the oil market, oil prices responded with a lag, just as the world economy was beginning its downturn.
FINANCIAL MARKET RESPONSE:Bonds:

The U.S. Treasury ten-year constant maturity bond posted a yield of 6.81 percent on October 18, 1973. The day before the oil embargo began. Initially the ten-year yield actually declined, reaching a low of 6.67 percent two months later. Over subsequent months, bond markets gradually sold off as the oil price hike began to be viewed as permanent, with serious inflationary consequences. But the bond market continued to trade in an orderly fashion. There were no sudden, sharp yield spikes. By March 18.1974. When the oil embargo ended, ten-year Treasuries were up to a yield of just 7.24percent. However, when prices continued upward even after the end of the embargo However, when prices continued upward even after the end of the embargo, bond yields resumed an upward path, topping 8 percent in the fall of 1974 and rising further to a peak of 8.5 percent a year later. All told, the t1rst oil shock produced a cumulative increase of almost 2 percentage points in long-term U.S. Treasury yields. Stock markets: The U.S. equity market, as measured by the S&P 5(K) index, was badly shaken by the events in the Middle East and the Arab oil embargo. From just before its imposition until oil prices began to stabilize in early 1975. Average stock prices nearly halved. The value of U.S. equities dropped by 50 percent or $600 billion, about 40percent of GDP. By comparison, that plunge was only slightly less severe than the collapse of the high tech bubble of 2000-03. Currencies: The Japanese yen. Which had been allowed to appreciate against the U.S. dollar after the 1971 collapse of the Bretton Woods system, weakened significantly in the aftermath of the oil shock? The Japanese economy was viewed as more vulnerable to a contraction in oil supplies. The currency traded at about 265 to the dollar just before the oil embargo. It weakened to about 300 by the middle of 1974 and then fluctuated Narrowly around that level until 1977. When the Carter Administration took office with a mandate to deal with the growing Japanese trade surplus. The German mark followed a similar pattern, but weakened less than the yen and turned up sooner. The deutschemark weakened from about 2.40 just before the embargo to above 2.80 by January 1974. But by the end of 1974 it was already stronger than before the oil shock and it continued to appreciate against the dollar subsequently.
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1979-81: IRANIAN REVOLUTION AND IRAN-IRAQ WAR

Worldwide crude oil production was 10% in 1980 than in 1979 In 1981 recession was caused by the Volker credit squeeze, when interest rates were increased sharply, with the objective of ending an inflationary spiral of which rising oil prices were a symptom rather than a cause.
Crises in Iran and Iraq

In 1979 and 1980, events in Iran and Iraq led to another round of crude oil price increases. The Iranian revolution resulted in the loss of 2 to 2.5 million barrels per day of oil production between November 1978 and June 1979. At one point production most halted.
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The Iranian revolution was the proximate cause of what would become the highest price in post-WWII history. However, its impact on prices would have been limited and of relatively short duration had it not been for subsequent events. Shortly after the revolution, production was up to 4 million barrels per day. In September 1980, Iran already weakened by the revolution was invaded by Iraq. By November, the combined production of both countries was only a million barrels per day and 6.5 million barrels per day less than a year before. Consequently worldwide crude oil production was 10 percent lower than in 1979.
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The combination of the Iranian revolution and the Iraq-Iran War cause crude oil prices to more than double increasing from $14 in 1978 to $35 per barrel in 1981.Three decades later Iran's production is only two-thirds of the level reached under the government Of Reza Pahlavi the former shah of Iran. Iraq's production remains a million barrels below its peak before the Iraq-Iran war.
FINANCIAL MARKET RESPONSE:Bonds The second oil shock had a fur more profoundly adverse impact on bond markets than the initial one, even though oil price advance was relatively smaller. Yields on ten year U.S. Treasuries were already moving progressively by the time events began to unfold in Iran late in 1978. By December the yield had pierced the 9 percent level, over 1percentage point higher than the year before. As oil prices started to escalate in subsequent months, yields traded in a narrow range without a clear upward trend until the second half of the year. The swirl of events over the closing months of the yearthe takeover of power by Ayatollah Khomeini, the hostage crisis, and the quick imposition of a freeze on Iranian assets in the United States led to sharp increases in bond yields. By January 1980, ten year Treasuries were quoted above 11 percent. Over the next several weeks, as the hostage crisis dragged on
with no end in sight, market confidence weakened further. By late February, the yield climbed above 13.5 percent, then a record high. There were subsequent temporary rallies, but the bond market continued under pressure even after oil prices peaked. Stock markets It is remarkable, looking back at that turbulent period, that the major stock market indexes in the United States were little affected by the events in the oil and bond markets. To be sure, there were abrupt movements on a few days, but overall the stock market reacted more calmly than the bond market, especially during 1980. The best explanation is that some industries were thought to benefit from higher energy prices. Investors moved money out of investments in sectors thought to be most negatively affectedrecall that this was the time of the U.S. government bail-out of Chrysler, so everyone knew that the auto industry was a casualty. But they moved into energy-related stocks and other industries, with no permanent net erosion of equity values. Currencies The Iranian revolution came just after the Carter Administration had put in Place in November 1978 its elaborate program to defend the dollar. That included Drawing on IMF credit lines as well as issuance of the so-called Carter bonds, in which The U.S. Treasury borrowed in currencies other than the dollar that worked for a while to restore some confidence, and the dollar briefly rallied across the board. Like after the first oil price shock, the yen continued to come under some pressure in the foreign exchange markets as oil prices climbed higher. But the experience of the deutschemark was different. By the end of 1979. As the U.S. rate of inflation began to ratchet higher. The deutschemark was again appreciating strongly.
1990-91 IRAQ INVADES KUWAIT AND FIRST GULF WAR

The impact of oil prices was negligible, not least because Saudi Arabia and other Arab nations were allied with U.S. forces and made efforts to counteract the price increase
FINANCIAL MARKET RESPONSES

Bonds The yield on ten year U.S. Treasuries was trading about 8 percent at the of the Iraqi invasion. In sharp contrast to the previous oil shocks, the rapid run-up in crude oil prices had only a minimal impact on the bond market in this episode. The yield peaked at just over 9 percent in September and soon fluctuated gradually lower, both during the preparations for Operation Desert Storm and after its successful implementation. Bond market participants were convinced at the time that the oil price spike would not be sustained, in large measure because of Saudi involvement in the war effort. They were right. Stock markets In contrast to the bond market, stocks fell back noticeably between the Iraqi invasion and the end of 1990, but they quickly retraced the decline once it was clear that the operation would be successful. Currencies The exchange market reaction was entirely different from the first two oil shocks. The deutschemark and the Japanese yen actually strengthened during the run-up in oil prices, and only settled back after hostilities ended and oil prices retreated.
1996-99: DEMAND-INDUCED PRICE SURGE

Global demand began to swell as the high-tech bubble encouraged a big investment
boom in North America and Europe and as the Asian economies began to recover. In the wake of the Asian financial crisis and a pick-up of Iraqi oil sales under the United Nations oil for- food program, oil prices plummeted to $10 per barrel in late 1998. Then oil prices began to head sharply higherbut this time, unlike the three previous episodes. Without any geopolitical trigger. Rather, global demand began to swell as the high-tech bubble encouraged a big investment boom in North America and Europe and as the Asian Economies began to recover. OPEC was either unable or unwilling to match increased demand by raising output. By the middle of 2000. oil prices tripled. It represented an even sharper price advance than during the shock of the Iranian revolution. The eventual peaking in the oil price coincided with President Clinton's decision to sell crude oil from the Strategic Petroleum Reserve, although analysts disagree as to how important that action was in taming the market pressures.

Bonds Yields on ten-year U.S. Treasuries moved up alongside the rise in oil prices. At the end of 1998. The yield was just above 4.5 percent. By Februarys 1999. it went above 5 percent. By June 1999 it exceeded 6 percent. Thereafter. It fluctuated narrowly just below that level by the time oil prices reached a peak. Naturally, rising oil prices were not the only factor influencing bond market participants. The furious increase in stock prices, especially for high tech companies, was generating huge reallocations of investment funds into stocks and out of bonds. Moreover, economic growth was accelerating. In the United States., the Federal Reserve, concerned about a buildup of inflationary pressures, as progressively tightening monetary policy. European monetary policies were also being tightened. So in a sense, it was a conventional late-cycle boom, with both oil prices and bond yields responding in a classic way.
Stocks Stock markets largely ignored the crude oil price advance of 1999-2000. The lure of rapidly escalating high tech stocks overshadowed it. Currencies
The deutschemark and Japanese yen reactions were entirely reversed from Past experience. The yen strengthened sharply throughout the oil price advance, While the deutschemark tended to weaken.
2002-05: IRAQ II AND SURGING DIL DEMAND
The tripling of crude oil prices since 2002has had generally more muted and often paradoxical effects on the financial markets

Bonds Bond market participants have shown little of the concern, or sometimes fear, associated with oil price surges of similar magnitude in the previous thirty years. Accordingly, yields have exhibited little of the volatility, and none of the upward tendency, of the four previous episodes, held Chairman Greenspan has remarked that the recent bond market behavior is not readily explainablehis word is "conundrum." Part of that conundrum has to do with the absence of heightened intiationary expectations, despite the upward pressure on energy costs, which have yet to feed through into prices generally. Stocks While the stock market has rebounded from the depths of the tremendous sell-off of 200003, recently investors have expressed great uncertainty about future prospects for corporate earnings The higher energy costs bother them, even as bond investors are unimpressed Currencies The dollar depreciated sharply from March 2002 until the end of 2004 but has rallied since. The latest oil price surge has been a factor in the Japanese yen market, but not in the market for Euros. Other factors are weighing on the European common currency. Including political questions raised by defeat of the constitutional referendums in France and the Netherlands. A very similar analysis applies to the current period. Although the limits to supplies of oil imply that prices must increase in the medium term, the fivefold increase in prices from $13/barrel to $65/barrel over the past five years cannot be explained in this way. Rather the increase is the product of booming demand in the United States and China, which can in turn be attributed to the expansionary monetary policy adopted by the US Federal Reserve in response to the dotcom crash and recession of 2000 and 2001.
Petrol dollar scam
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Back in 1971, the USA printed and spent far more paper money than it could cover by gold.
Few years later, French demanded redemption of its paper-dollar holdings in gold. But the USA rejected as it actually didn't had enough gold for the dollars it had already printed and spent all over the world, thus committing an act of bankruptcy.
=
So the USA went to the Saudis and cut a deal OPEC denominate all sales of oil in US dollars.
From that point, every nation that needed to buy oil had to firstly hold US dollars, which meant that they exchanged their goods and services for dollars, which the Americans just printed.
The Americans brought their oil literally for free by printing those dollars. The ultimate free lunch for the Americans at the expense of the rest of the world.
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However, the scam began to unravel when Saddam Hussein started selling Iraq's oil directly for Euro, abrogating the cozy arrangement the Americans had with OPEC. Thus Saddam had to be stopped. How? USA concocted up a pretext to wage war (drama of twin tower blast) and invade Iraq and the first thing the Americans did was to revert sales of oil back to dollars. The currency crisis was averted for the moment.
But Hugo Chavez (Venezuela President) also started selling Venezuelan oil for currencies
other than dollars, so there were a number of attempts on his life and "regime change", traceable right back to the CIA. The petrodollar cat was out of the bag.
Iran President (Ahmedinejad), watching all of this, decided to kick The Great Satan in the goo lies and do the same thing - sell oil for every currency EXCEPT US dollars. The shell game is coming to an end for the Americans. As the nations of the world find that they can buy oil for their own currencies instead of holding paper US dollars, more OPEC nations will abandon the dollar.
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The worst thing for the Americans is that eventually, they will also have to buy their oil with Euro or Rubles instead of just printing paper money to get it. That will be the end of the American Empire, the end of funding for the US military and the destruction of the US economy. The great scam is coming to an end and there's not a lot that the USA can do about it, except start another world war!!!
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Chapter 12 Findings
CHAPTER CONTENTS
Correlation between Crude oil and Dollar Correlation between Crude oil and Euro
Findings & Analysis

Price of dollar
Month January February March April May June July August September October November December
Price 2007 44.21 44.01 43.79 42.02 40.56 40.59 40.28 40.68 40.17 39.37 39.32 39.38
Price 2008 39.27 39.67 40.15 39.97 41.88 42.76 42.72 42.92 45.43 48.62 48.79 48.48
Price 2009 48.73 49.19 51.21 50.06 48.55 47.75 48.44 48.33 48.36 46.72 46.56 46.60
Price of crude oil
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Month January February March April May June July August September October November December
Price 2007 2717 2870 2730 2580 2880 3115 3011 3245 3561 3619 3527 3810
Price 2008 3641 4084 4235 4651 5424 6000 5384 5056 4524 3283 2713 1893
Price 2009 2043 2271 2473 2518 3136 3446 3246 3555 3205 3616 3560 3705
Correlation co-efficient 2007

X =
x n
= 494.37 12 = 41.2 Y = = = y n 37665 12 3138.75 (x-x)(y-y) SQRT (x-x)2 * SQRT (y-y)2 = - 6445.82 SQRT 38.55* SQRT 2012625.3 = - 6445.82 6.208865 * 1418.67 = -6445.82 8410.09557 = - 0.77
Correl (x,y) =
Interpretation
Here the correlation between price of Dollar and Crude oil is 0.77. So I can interpret that it is 77% negatively correlate.
Year 2008
X = x
Page 102
n = 520.6642 12 = 43.3886 Y = = y n 50888 12 = 4240.666666 Correl (x,y) = (x-x)(y-y) SQRT (x-x)2 * SQRT (y-y)2 = - 27064.86 SQRT 118.67 * SQRT 15862768.65 = - 27064.86 10.88* 3982.80914 = - 27064.86 43332.97 = - 0.62 Interpretation Here the correlation between price of Dollar and Crude oil is 0.62. So I can interpret that it is 62% negatively correlated.
Year 2009
X = x n = 580.493
12 = 48.3744 Y = = y n 36774 12 = 3064.5 Correl (x,y) = = = (x-x)(y-y) SQRT (x-x)2 * SQRT (y-y)2 - 6069.48 SQRT 21.325 * SQRT 3725479 - 6069.48 4.62 * 1930.149994 = - 6069.48 8917.29 = -0.68 Interpretation: Here the correlation between price of Dollar and Crude oil is 0.60. So I can interpret that it is 68% negatively correlated. In the correlation between Crude oil and Dollar. If Crude oil price is increase so Dollar price is decrease and if Crude oil price is decrease so Dollar price is increase. Crude oil and Dollar relationship is inverse. Because of in 1972 create a PETROL DOLLAR SCAM between US and oil producing country. Ultimately affect this scam in finding this correlation between Crude oil and Dollar price.
Correlation with euro and crude oil

Euro price
Month January February March April May June July August September October November December Price 2007 57.47 57.58 58.00 56.77 54.81 54.47 55.27 55.42 55.87 56.03 57.73 57.30 Price 2008 57.80 58.54 62.30 62.96 65.19 66.55 67.32 64.18 65.21 64.54 62.20 65.55 Price 2009 64.51 62.88 66.80 66.07 66.16 66.92 68.23 68.96 70.42 69.22 69.44 68.09
Page 105
Price of crude oil

Month January February March April May June July August September October November December Price 2007 2717 2870 2730 2580 2880 3115 3011 3245 3561 3619 3527 3810 Price 2008 3641 4084 4235 4651 5424 6000 5384 5056 4524 3283 2713 1893 Price 2009 2043 2271 2473 2518 3136 3446 3246 3555 3205 3616 3560 3705
Correlation co-efficient 2007
Page 106
X =
x n
= 676.76 12 = 56.4 Y = = = y n 37665 12 3138.75 (x-x)(y-y) SQRT (x-x)2 * SQRT (y-y)2 = 419.1425 SQRT 16.68* SQRT 2012625.3 = 419.1425 4.084 * 1418.67 = 419.1425 5793.85 = 0.0723 Interpretation Here the correlation between price of Euro and Crude oil is 0.0723. So I can interpret that it is 7.23% positively correlate.
Correl (x,y) =
Year 2008
X = x
Page 107
n = 762.35 12 = 63.53 Y = = y n 50888 12 = 4240.666666 Correl (x,y) = (x-x)(y-y) SQRT (x-x)2 * SQRT (y-y)2 = 13402.09 SQRT 95.92 * SQRT 15862768.65 = 13402.09 9.79* 3982.80914 = 13402.09 39007.15 = 0.34 Interpretation Here the correlation between price of Euro and Crude oil is 0.34. So I can interpret that it is 34% positively correlated
Year 2009 X = x n = 807.70

12 = 67.31 Y = = y n 36774 12 = 3064.5 Correl (x,y) = = = = (x-x)(y-y) SQRT (x-x)2 * SQRT (y-y)2 11147.43 SQRT 52.69 * SQRT 3725479 11147.43 7.26 * 1930.149994 11147.43 14012.889 = 0.7955 Interpretation Here the correlation between price of Euro and Crude oil is 0.7955. So I can interpret that it is 79.55% positively correlated. In the correlation between Crude oil and Euro. If Crude oil price increase so Euro price also increase and if Crude oil price decrease so Euro price also decrease. Because of no one scam between Euro currency and Crude oil. So that positvely relation between Crude oil and Euro.
Page 109
Chapter 13 Conclusion
Conclusion
In this project, I came to know about the indian commodity market and rules and regulation about the indian commodities as well as commodity derivative market. In this project, I have examined fundamental factors affecting crude oil that is major factors like demand of crude oil, supply of crude oil, macroeconomic variables etc. As I have seen in these 3 years the price of Crude oil was not remains same but it shows very variability. In year 2007 the price of Crude oil reached from 2717 Rs. /Barrel to 3810 Rs. /Barrel. In year 2008 the price of Crude oil remains between 2000 Rs. /Barrel to 6000 Rs. /Barrel. In year 2009 the price of Crude oil reached from 2043 Rs. /Barrel to 3705 Rs. /Barrel. I have examined correlation between crude oil and Dollar. Year 2007 2008 2009 Correlation -0.77 -0.62 -0.68
In that it is found that in year 2007 crude oil and Dollar co-rrelation is -0.77 but year 2008 crude oil and Dollar co-rrelation is -0.62 decrease the correlation between this two years and in year 2009 minor changes in crude oil and Dollar co-rrelation as compare previous year.
I have examined correlation between crude oil and Euro. Year 2007 Correlation 0.072
Page 111
2008 2009
0.34 0.79
In that it is found that co-rrelation between crudeoil and Euro are constantly increasing last 3 years. Correlations measure the strength and direction of a statistical relation between two variables. If changes in positions from one day to the next of any category of traders are associated with daily changes in prices, then correlations should emerge. Major oil production is done by OPEC countries. They have the power to control the prices of Crude oil. World should not depend on these countries & non-OPEC countries should increase their oil production. So that in certain critical situation the supply of crude is not affected and prices can be kept under control. At last, the overall reserves of Crude oil are limited. They will last for 30-35 years only. Each and every person should use petroleum products only whenever it is required. The waste of petroleum should be reduced.
Bilbliography
Websites
www.nseindia.com http://www.wtrg.com/prices.htm http://www.opec.org/opec_web/en/ http://www.zealllc.com/2005/oilfund.htm http://www.oil-price.net/ http://www.eia.doe.gov/emeu/international/reserves.html http://en.wikipedia.org/wiki/Oil_reserves http://www.worldenergyoutlook.org/ http://finance.indiamart.com/markets/commodity/ http://www.purvingertz.com/dynpage.cfm?pageid=22
Book
Business Statistics B.S.Shah
Page 113
Annexure
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OVERVIEW Of COMMODITY MARKET AND FUNDAMENTAL ANALYSIS OF CRUDEOIL

B.M. COLLEGE OF BUSINESS ADMINISTRATION

OVERVIEW Of COMMODITY MARKET AND FUNDAMENTAL ANALYSIS OF CRUDEOIL

Chapter-1 Introduction To Economy

B.M. COLLEGE OF BUSINESS ADMINISTRATION

OVERVIEW Of COMMODITY MARKET AND FUNDAMENTAL ANALYSIS OF CRUDEOIL

B.M. COLLEGE OF BUSINESS ADMINISTRATION

OVERVIEW Of COMMODITY MARKET AND FUNDAMENTAL ANALYSIS OF CRUDEOIL

Currency Fiscal year Trade organizations Statistics

1 Indian Rupee (INR) () = 100 Paise

1 April 31 March WTO, SAFTA, G-20 and others

$1.242 trillion (2009) $3.528 trillion (2009) (PPP)

GDP growth GDP per capita

Inflation (CPI) Population below poverty line Gini index

36.8 (List of countries)

B.M. COLLEGE OF BUSINESS ADMINISTRATION

OVERVIEW Of COMMODITY MARKET AND FUNDAMENTAL ANALYSIS OF CRUDEOIL

Labour force Labour force by occupation Unemployment Main industries

Exports Export goods

B.M. COLLEGE OF BUSINESS ADMINISTRATION

OVERVIEW Of COMMODITY MARKET AND FUNDAMENTAL ANALYSIS OF CRUDEOIL

debt Public finances

OVERVIEW Of COMMODITY MARKET AND FUNDAMENTAL ANALYSIS OF CRUDEOIL

OVERVIEW Of COMMODITY MARKET AND FUNDAMENTAL ANALYSIS OF CRUDEOIL

OVERVIEW Of COMMODITY MARKET AND FUNDAMENTAL ANALYSIS OF CRUDEOIL

B.M. COLLEGE OF BUSINESS ADMINISTRATION

OVERVIEW Of COMMODITY MARKET AND FUNDAMENTAL ANALYSIS OF CRUDEOIL

B.M. COLLEGE OF BUSINESS ADMINISTRATION

OVERVIEW Of COMMODITY MARKET AND FUNDAMENTAL ANALYSIS OF CRUDEOIL

B.M. COLLEGE OF BUSINESS ADMINISTRATION

OVERVIEW Of COMMODITY MARKET AND FUNDAMENTAL ANALYSIS OF CRUDEOIL

OVERVIEW Of COMMODITY MARKET AND FUNDAMENTAL ANALYSIS OF CRUDEOIL

Data collection tools

Benefits of the study

Limitations of the study

OVERVIEW Of COMMODITY MARKET AND FUNDAMENTAL ANALYSIS OF CRUDEOIL

OVERVIEW Of COMMODITY MARKET AND FUNDAMENTAL ANALYSIS OF CRUDEOIL

History& introduction Of Commodity market

Introduction to Commodity Market

OVERVIEW Of COMMODITY MARKET AND FUNDAMENTAL ANALYSIS OF CRUDEOIL

What is a commodity exchange?

What is Commodity Futures?

OVERVIEW Of COMMODITY MARKET AND FUNDAMENTAL ANALYSIS OF CRUDEOIL

History of Evolution of commodity markets

OVERVIEW Of COMMODITY MARKET AND FUNDAMENTAL ANALYSIS OF CRUDEOIL

OVERVIEW Of COMMODITY MARKET AND FUNDAMENTAL ANALYSIS OF CRUDEOIL

India and the commodity market

OVERVIEW Of COMMODITY MARKET AND FUNDAMENTAL ANALYSIS OF CRUDEOIL

OVERVIEW Of COMMODITY MARKET AND FUNDAMENTAL ANALYSIS OF CRUDEOIL

Structure of commodity market

FMC (Forwards Market Commission)

B.M. COLLEGE OF BUSINESS ADMINISTRATION

OVERVIEW Of COMMODITY MARKET AND FUNDAMENTAL ANALYSIS OF CRUDEOIL

22 other regional Exchanges

OVERVIEW Of COMMODITY MARKET AND FUNDAMENTAL ANALYSIS OF CRUDEOIL

OVERVIEW Of COMMODITY MARKET AND FUNDAMENTAL ANALYSIS OF CRUDEOIL

B.M. COLLEGE OF BUSINESS ADMINISTRATION

OVERVIEW Of COMMODITY MARKET AND FUNDAMENTAL ANALYSIS OF CRUDEOIL

B.M. COLLEGE OF BUSINESS ADMINISTRATION

OVERVIEW Of COMMODITY MARKET AND FUNDAMENTAL ANALYSIS OF CRUDEOIL

Difference between commodity and financial derivatives

OVERVIEW Of COMMODITY MARKET AND FUNDAMENTAL ANALYSIS OF CRUDEOIL

B.M. COLLEGE OF BUSINESS ADMINISTRATION