Description
This is a presentation about fundamental analysis of crude oil.
MCX Presentation on
MARKET AND FUNDAMENTAL ANALYSIS OF CRUDE OIL
CONTENTS
History ? Fundamental Analysis ? Market Analysis ? Conclusion
?
HISTORY OF CRUDE OIL
History
Fundamental Analysis
Technical Analysis
Conclusion
OIL PRODUCTION AND PRICES
History
Fundamental Analysis
Technical Analysis
Conclusion
RESERVES OF CRUDE OIL
Saudi Arabia - 66 yrs Canada 188 yrs Kuwait 110 yrs Iran 142 yrs Iran 95 yrs
OPEC COUNTRIES RESERVES
TOP COUNTRIES
Producer Consumer Exporter Saudi Arabia Russia UAE Iran Kuwait Importer USA Japan China Germany South Korea
Saudi Arabia USA Russia USA Iran China China Japan India Russia
FUNDAMENTAL ANALYSIS
1. 2. 3. 4.
5.
6. 7.
Demand Supply Concentrated Spare Capacity Low Inventory/Reserves Geopolitical Uncertainty Price Inelastic Supply and Demand Macroeconomic Variables
Exchange Rate ? Interest Rate
?
History Fundamental Analysis Technical Analysis Conclusion
1. DEMAND
History
Fundamental Analysis
Technical Analysis
Conclusion
DEMAND CONTD…..
OECD Demand
25 23 Millions Barrel / Day 21 North America
19
17 15 13 11 9 7 5 2007 2008 2009 2010 2011
Europe
Pacific
History
Fundamental Analysis
Technical Analysis
Conclusion
DEMAND CONTD…..
Non OECD Demand
12
FSU
Europe China Other Asia
10 Millions Barrel / Day
8
6 Latin America 4 Middle East 2 Africa
0 2007 2008 2009 2010 2011
History
Fundamental Analysis
Technical Analysis
Conclusion
DEMAND CONTD…..
% of Total World Demand
60%
Total OECD Demand 55% Total Non OECD Demand
50%
45%
40% 2007 2008 2009 2010 2011
History
Fundamental Analysis
Technical Analysis
Conclusion
DEMAND CONTD…..
% change in Oil Demand in 2008-11
-3%
Iran
0% 4% 24% Korea
Mexico -1% Canada Saudi Arabia Brazil Russia India -12% -8% Japan China Europe 5* -2% US50 -15% -10% -5% 0%
12%
3% 11% 25%
5%
10%
15%
20%
25%
30%
History
Fundamental Analysis
Technical Analysis
Conclusion
2. SUPPLY
% of Total Supply
60% 55% 50% Total Non OPEC 45% OPEC 40% 35% 30%
2007
2008
2009
History
Fundamental Analysis
Technical Analysis
Conclusion
SUPPLY CONTD…..
% of Total Non Opec Supply
65% 60% 55% Total OECD Supply 50% 45% 40% 35% 30% 2007 2008 2009 2010 2011 Total Non OECD Supply
History
Fundamental Analysis
Technical Analysis
Conclusion
SUPPLY CONTD…..
% Contribution of OECD Countries
80% 70% 60% 50% 40% 30% 20% 10% 0% 2009 2010 2011 North America Europe Pacific
History
Fundamental Analysis
Technical Analysis
Conclusion
SUPPLY CONTD…..
% Contribution of Non OECD Countries
50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 2009 2010 2011 Africa Europe Latin America Middle East Former USSR Asia
History
Fundamental Analysis
Technical Analysis
Conclusion
3. CONCENTRATED SPARE CAPACITY
?
Worlds Surplus Production Capacity is very low. 2% of Worlds Consumption (June 2008). Concentrated in few areas only. Price changes thus becomes inevitable.
History Fundamental Analysis Technical Analysis Conclusion
?
?
?
4. INVENTORIES / RESERVES
?
Petroleum inventory levels are a measure of the balance, or imbalance, between petroleum production and demand.
?
It provide a good market barometer of crude oil price change.
History
Fundamental Analysis
Technical Analysis
Conclusion
INVENTORIES CONTD..
History
Fundamental Analysis
Technical Analysis
Conclusion
5. GEOPOLITICAL UNCERTAINTY
High degree of uncertainty. ? Current world oil supplies are highly concentrated. ? These disruptions:
?
? Power
failures, ? Worker strikes, ? Pipeline leaks and explosions, ? Cyclones and hurricanes, ? Saboteurs ? Civil wars
History Fundamental Analysis Technical Analysis Conclusion
6. PRICE-INELASTIC SUPPLY AND DEMAND
?
Short run demand and supply of oil is inelastic Reasons could be as follows:
The quantity supplied is not responsive to changes in market price ? Due to low spare capacity, ? The inability to bring new supplies online Quickly ? Relatively low inventories to draw down
?
History
Fundamental Analysis
Technical Analysis
Conclusion
7. MACRO ECONOMICAL FACTORS
? Exchange
Rate and Crude Oil
The crude oil prices gets affected because of following reasons… ? Dollar depreciates, Demand increases thus price increase ? Production decision of the suppliers. Sometimes the effects may even get nullified as USA is the major exporter as well as importer of the crude oil
History Fundamental Analysis Technical Analysis Conclusion
MACRO ECONOMICAL FACTORS CONTD…..
History
Fundamental Analysis
Technical Analysis
Conclusion
MACRO ECONOMICAL FACTORS CONTD…..
? Interest
?
?
Rate and Crude Oil
Generally the Interest rates bear a negative correlation to the crude oil prices. Channel by which the crude prices can rise:
?
?
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 Reduction in the costs associated with storing oil and other commodities
Fundamental Analysis Technical Analysis Conclusion
History
TECHNICAL ANALYSIS:
1.
2.
3.
4.
5.
Moving Average Relative Strength Index (RSI) Moving Average Convergence Divergence (MACD) Support and Resistance Crude Oil Futures
History
Fundamental Analysis
Technical Analysis
Conclusion
1. MOVING AVERAGE
History
Fundamental Analysis
Technical Analysis
Conclusion
2. RSI
RSI of 70 represents a over brought position and thus the commodity can be sold ? RSI of 0 represents a oversold position and thus is a good pick for buy. ? Currently the RSI is around 66.So the RSI suggests selling of crude oil.
?
History
Fundamental Analysis
Technical Analysis
Conclusion
3. MACD
?
http://www.youtube.com/watch?v=OR8vw Fv-5iU
History
Fundamental Analysis
Technical Analysis
Conclusion
4. SUPPORT AND RESISTANCE
94 93 92 91 90 89 Support Level 88 Resistance Level 87 1 2 3 4 5
Based on the charts and explanations above our opinion is cautiously selling crude below 91.85 targeting 89.05 and stop loss above 92.60, might be appropriate.
History Fundamental Analysis Technical Analysis Conclusion
5. CRUDE OIL FUTURES
?
In the case of crude oil, the main futures exchanges are the New York Mercantile Exchange (NYMEX) and the Intercontinental Exchange (ICE) where West Texas Intermediate (WTI) and North Sea Brent crude oil are traded respectively.
HOW ARE OIL FUTURES TRADED?
?
Futures contracts are traded on regulated futures exchanges. Trading can take place through electronic dealing systems, open outcry around a pit or a combination of both.
?
SETTLEMENT
In the case of the NYMEX WTI contract, physical delivery is possible and entails delivery into the oil hub of Cushing, Oklahoma. ? On the ICE Brent contract, there is no physical delivery but a cash settlement is available – the value of the position is assessed relative to the settlement price and a corresponding financial payment is made.
?
THANK YOU
doc_991722904.pptx
This is a presentation about fundamental analysis of crude oil.
MCX Presentation on
MARKET AND FUNDAMENTAL ANALYSIS OF CRUDE OIL
CONTENTS
History ? Fundamental Analysis ? Market Analysis ? Conclusion
?
HISTORY OF CRUDE OIL
History
Fundamental Analysis
Technical Analysis
Conclusion
OIL PRODUCTION AND PRICES
History
Fundamental Analysis
Technical Analysis
Conclusion
RESERVES OF CRUDE OIL
Saudi Arabia - 66 yrs Canada 188 yrs Kuwait 110 yrs Iran 142 yrs Iran 95 yrs
OPEC COUNTRIES RESERVES
TOP COUNTRIES
Producer Consumer Exporter Saudi Arabia Russia UAE Iran Kuwait Importer USA Japan China Germany South Korea
Saudi Arabia USA Russia USA Iran China China Japan India Russia
FUNDAMENTAL ANALYSIS
1. 2. 3. 4.
5.
6. 7.
Demand Supply Concentrated Spare Capacity Low Inventory/Reserves Geopolitical Uncertainty Price Inelastic Supply and Demand Macroeconomic Variables
Exchange Rate ? Interest Rate
?
History Fundamental Analysis Technical Analysis Conclusion
1. DEMAND
History
Fundamental Analysis
Technical Analysis
Conclusion
DEMAND CONTD…..
OECD Demand
25 23 Millions Barrel / Day 21 North America
19
17 15 13 11 9 7 5 2007 2008 2009 2010 2011
Europe
Pacific
History
Fundamental Analysis
Technical Analysis
Conclusion
DEMAND CONTD…..
Non OECD Demand
12
FSU
Europe China Other Asia
10 Millions Barrel / Day
8
6 Latin America 4 Middle East 2 Africa
0 2007 2008 2009 2010 2011
History
Fundamental Analysis
Technical Analysis
Conclusion
DEMAND CONTD…..
% of Total World Demand
60%
Total OECD Demand 55% Total Non OECD Demand
50%
45%
40% 2007 2008 2009 2010 2011
History
Fundamental Analysis
Technical Analysis
Conclusion
DEMAND CONTD…..
% change in Oil Demand in 2008-11
-3%
Iran
0% 4% 24% Korea
Mexico -1% Canada Saudi Arabia Brazil Russia India -12% -8% Japan China Europe 5* -2% US50 -15% -10% -5% 0%
12%
3% 11% 25%
5%
10%
15%
20%
25%
30%
History
Fundamental Analysis
Technical Analysis
Conclusion
2. SUPPLY
% of Total Supply
60% 55% 50% Total Non OPEC 45% OPEC 40% 35% 30%
2007
2008
2009
History
Fundamental Analysis
Technical Analysis
Conclusion
SUPPLY CONTD…..
% of Total Non Opec Supply
65% 60% 55% Total OECD Supply 50% 45% 40% 35% 30% 2007 2008 2009 2010 2011 Total Non OECD Supply
History
Fundamental Analysis
Technical Analysis
Conclusion
SUPPLY CONTD…..
% Contribution of OECD Countries
80% 70% 60% 50% 40% 30% 20% 10% 0% 2009 2010 2011 North America Europe Pacific
History
Fundamental Analysis
Technical Analysis
Conclusion
SUPPLY CONTD…..
% Contribution of Non OECD Countries
50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 2009 2010 2011 Africa Europe Latin America Middle East Former USSR Asia
History
Fundamental Analysis
Technical Analysis
Conclusion
3. CONCENTRATED SPARE CAPACITY
?
Worlds Surplus Production Capacity is very low. 2% of Worlds Consumption (June 2008). Concentrated in few areas only. Price changes thus becomes inevitable.
History Fundamental Analysis Technical Analysis Conclusion
?
?
?
4. INVENTORIES / RESERVES
?
Petroleum inventory levels are a measure of the balance, or imbalance, between petroleum production and demand.
?
It provide a good market barometer of crude oil price change.
History
Fundamental Analysis
Technical Analysis
Conclusion
INVENTORIES CONTD..
History
Fundamental Analysis
Technical Analysis
Conclusion
5. GEOPOLITICAL UNCERTAINTY
High degree of uncertainty. ? Current world oil supplies are highly concentrated. ? These disruptions:
?
? Power
failures, ? Worker strikes, ? Pipeline leaks and explosions, ? Cyclones and hurricanes, ? Saboteurs ? Civil wars
History Fundamental Analysis Technical Analysis Conclusion
6. PRICE-INELASTIC SUPPLY AND DEMAND
?
Short run demand and supply of oil is inelastic Reasons could be as follows:
The quantity supplied is not responsive to changes in market price ? Due to low spare capacity, ? The inability to bring new supplies online Quickly ? Relatively low inventories to draw down
?
History
Fundamental Analysis
Technical Analysis
Conclusion
7. MACRO ECONOMICAL FACTORS
? Exchange
Rate and Crude Oil
The crude oil prices gets affected because of following reasons… ? Dollar depreciates, Demand increases thus price increase ? Production decision of the suppliers. Sometimes the effects may even get nullified as USA is the major exporter as well as importer of the crude oil
History Fundamental Analysis Technical Analysis Conclusion
MACRO ECONOMICAL FACTORS CONTD…..
History
Fundamental Analysis
Technical Analysis
Conclusion
MACRO ECONOMICAL FACTORS CONTD…..
? Interest
?
?
Rate and Crude Oil
Generally the Interest rates bear a negative correlation to the crude oil prices. Channel by which the crude prices can rise:
?
?
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 Reduction in the costs associated with storing oil and other commodities
Fundamental Analysis Technical Analysis Conclusion
History
TECHNICAL ANALYSIS:
1.
2.
3.
4.
5.
Moving Average Relative Strength Index (RSI) Moving Average Convergence Divergence (MACD) Support and Resistance Crude Oil Futures
History
Fundamental Analysis
Technical Analysis
Conclusion
1. MOVING AVERAGE
History
Fundamental Analysis
Technical Analysis
Conclusion
2. RSI
RSI of 70 represents a over brought position and thus the commodity can be sold ? RSI of 0 represents a oversold position and thus is a good pick for buy. ? Currently the RSI is around 66.So the RSI suggests selling of crude oil.
?
History
Fundamental Analysis
Technical Analysis
Conclusion
3. MACD
?
http://www.youtube.com/watch?v=OR8vw Fv-5iU
History
Fundamental Analysis
Technical Analysis
Conclusion
4. SUPPORT AND RESISTANCE
94 93 92 91 90 89 Support Level 88 Resistance Level 87 1 2 3 4 5
Based on the charts and explanations above our opinion is cautiously selling crude below 91.85 targeting 89.05 and stop loss above 92.60, might be appropriate.
History Fundamental Analysis Technical Analysis Conclusion
5. CRUDE OIL FUTURES
?
In the case of crude oil, the main futures exchanges are the New York Mercantile Exchange (NYMEX) and the Intercontinental Exchange (ICE) where West Texas Intermediate (WTI) and North Sea Brent crude oil are traded respectively.
HOW ARE OIL FUTURES TRADED?
?
Futures contracts are traded on regulated futures exchanges. Trading can take place through electronic dealing systems, open outcry around a pit or a combination of both.
?
SETTLEMENT
In the case of the NYMEX WTI contract, physical delivery is possible and entails delivery into the oil hub of Cushing, Oklahoma. ? On the ICE Brent contract, there is no physical delivery but a cash settlement is available – the value of the position is assessed relative to the settlement price and a corresponding financial payment is made.
?
THANK YOU
doc_991722904.pptx