CRUDE IL Multi Commodity Exchange of India Limited (MCX) is a state-of-the-art futures exchange based in India. The exchange facilitates online trading in futures contracts across segments, including bullion, base metals, energy, and agricultural commodities, besides offering clearing and settlement services. The exchange thus provides an effective mechanism for price risk management. INTRDUCTIN Crude oil is a complex mixture of various hydrocarbons found in the upper layers of the earth's crust. Crude oil is often known as the mother of all commodities because of its importance in the manufacturing of a wide variety of materials. Crude oil accounts for 32.6% of the world's primary energy consumption. Crude oil is used to produce fuel for cars, trucks, airplanes, boats, and trains. It is also used for manufacturing a wide variety of other products, including asphalt for roads; lubricants for all kinds of machines; and plastics for toys, bottles, and food wraps, among others. World primary energy usage, 214* Hydro electricity 6.8% Renewables 2.5% Nuclear energy 4.4% il 32.6% MCX is a leading exchange in India, with a market share of 84.6%* (214-15) *In terms of the value of futures contracts traded (Source: FMC Data, May 215) VARIETIES Two factors that determine the market value of a specific grade of crude oil are density (measured in American Petroleum Institute (API) gravity) and the sulphur content, respectively, which are representative of how light and sweet or sour the crude oil is. A) West Texas Intermediate A high-quality crude oil explored and physically traded in the U.S., West Texas Intermediate is one of the largest traded in the world. Its API gravity is between 37 API and 42 API, and has.42% sulphur content. The New York Mercantile Exchange (NYMEX) is the primary exchange facilitating futures trade in this light sweet crude oil. B) Brent Crude il Source: BP Statistical Data *Provisional Coal 3% Natural gas 23.7% Crude oil from the North Sea, UK, Brent is a pricing benchmark for crude from Europe and Africa. With a gravity between 38 API and 39 API and.4% or less of sulphur content by weight, Brent crude oil is the second most traded variety of crude in the world. C) Middle East Crude il It is generally taken as the arithmetic average of Dubai and man crude grades. An API gravity b e t w e e n 31 API and 37 API and 2.5% or less of sulphur content by weight makes Middle East Crude il a heavy and sour crude oil. It is a variety with a very large physical market in the Gulf region. Most of the Indian refineries use crude benchmarked against Middle East Sour Crude il. TCM is a prominent futures trading platform that offers trading in this grade of crude oil.
GLBAL SCENARI, 214 Reserves. Total world proven oil reserves reached 17.1 billion barrels at the end of 214, sufficient to meet 52.5 years of global production. The largest addition to reserves came from Saudi Arabia, which added 1.1 billion barrels. The largest decline came from Russia, where reserves fell by 1.9 billion barrels. PEC countries continue to hold a major share of world s reserves, accounting for 71.6% of the global total. Production. Global oil production growth was more than double that of global consumption, rising by 2.1 million barrels per day (bpd) or 2.3%. Production outside PEC grew by 2.1 million bpd. The US (+1.6 million bpd) recorded the largest growth in the world, becoming the first country ever to increase production by at least 1 million bpd for three consecutive years, and taking over from Saudi Arabia as the world s largest oil producer. Along with the US, production in Canada (+31, bpd) and Brazil (+23, bpd) also reached record levels in 214. PEC output was flat, and the group s share in global production fell to 41%, its lowest since 23. Declines in Libya (-49, bpd) and Angola (-9, bpd) were offset by gains in Iraq (+14, bpd), Saudi Arabia (+11, bpd) and Iran (+9, bpd). Consumption. Global oil consumption grew by.8 million bpd or.8% a little below its recent historical average and significantly weaker than the increase of 1.4 million bpd seen in 213. Countries outside the ECD once again accounted for all of the net growth in global consumption. ECD consumption declined by 1.2%, the eighth decrease in the past nine years. Chinese consumption growth was below average but still recorded the largest increment to global oil consumption (+39, bpd); Japan recorded the largest decline (-22, bpd), with Japanese oil consumption falling to its lowest level since 1971 il proved reserves % share in 214* thers 17.8% Venezuela 17.5% Libya, 2.8% Russian Federation 6.1% United Arab Emirates 5.8% Kuwait 6.% Iraq 8.8% Iran 9.3% Source: BP Statistical Data * provisional Saudi Arabia 15.7% Canada 1.2% World oil production % share in 214* World oil consumption % share in 214* MCX is st India s 1 listed exchange thers 27.4% Nigeria 2.7% Venezuela 3.3% Mexico 3.2% Kuwait 3.6% Iraq 3.8% Iran 4.% Saudi Arabia 12.9% Russian Federation 12.7% US 12.3% China 5.% Canada 5.% United Arab Emirates 4.% thers 46.1% Italy 1.3% France 1.8% Mexico 2.% US 19.9% China 12.4% Japan 4.7% India 4.3% Germany 2.6% South Korea 2.6% Canada 2.4% Source: BP Statistical Data * provisional 8. 7. 6. 5. 4. 3. 2. 1.. Top 1 Exporters of crude oil, 214 (million bpd) Top 1 Importers of crude oil, 214 (million bpd) 7.2 9. 8. 7.4 7. 6.2 Saudi Arabia Russia 4.5 2.5 2.5 2.1 2. 2. 1.6 1.1 1.2 UAE Iraq Nigeria Kuwait Venezuela Angola Iran Norway 6. 5. 4. 3. 2. 1.. Source: opec.org US China India Japan South Korea 3.8 3.2 2.5 1.8 1.2 1.1 1.1 Germany Spain Italy France 1. Netherlands
PEC VERVIEW The rganization of the Petroleum Exporting Countries (PEC) was founded in Baghdad, Iraq, in September 196. PEC coordinates and unifies the petroleum policies of its member countries and ensures the stabilization of oil markets to secure an efficient, economic, and regular supply of petroleum for consumers, a steady income to producers, and a fair return on capital for those investing in the petroleum industry. It is an organization of twelve developing countries. They are: Saudi Arabia, Iran, Kuwait, UAE, Iraq, Venezuela, Nigeria, Angola, Libya, Algeria, Qatar, and Ecuador. PEC accounts for about 71.6% of the world's proven oil reserves. As of 214, PEC accounted for approximately 41% of the global oil production. utput from PEC in September 215 declined to 32.48 million bpd from 32.281 in Aug. 215 according to Bloomberg survey of oil companies, producers and analysts. Saudi Arabia, PEC's top producer, saw the biggest decline, reducing output by 2, bpd to 1.3 million bpd. Iran's and Iraq's production fell by 1, bpd to 2.8 million bpd and 85, bpd to 4.214 million bpd respectively. Nevertheless, Saudi Arabia remains the top PEC producer, providing nearly one-third of the PEC supply. The other members that follow are Iraq (13.1%), Kuwait (9.2%), the UAE (9%), Iran (8.7%), and Venezuela (7.8%). MCX reaches out to over 1,9 cities and towns in India through 4,8,+ trading terminals (including CTCL) (FY 214-15) 33 32.5 32 31.5 31 3.5 3 29.5 29 28.5 PEC total monthly estimated crude oil production (million bpd) Sept. 12 Sept. 13 Sept. 14 Sept. 15 Source: Bloomberg Nigeria 6.2 Venezuela 7.8 % Share in PEC monthly production* Ecuador 1.7 Angola 5.5 Kuwait 9.2 Saudi Arabia 32.1 Iraq 13.1 *As of Sept 215 INDIAN SCENARI The estimated reserves of crude oil in India as on March 214 stood at 762.74 million metric tonnes (MMT). There was increase of.57% in the estimated reserve of crude oil for the country as a whole by March, 214 as compared to the position a year ago. Geographical distribution of Crude oil indicates that the maximum reserves are in the Western ffshore (42.91%) followed by Assam (22.69%). Production of crude petroleum increased from 32.19 MMT during 25-6 to 37.79 MMT during 213-14, and the net import increased from 99.41 MMT to 189.24 MMT during same period. As on April 214, there is no change in refining capacity in the country (215 MMTPA) over the period of one year. Iran 8.7 Algeria 3.4 Qatar 2. Libya 1.1 UAE 9. India s primary energy consumption by fuel type, 214* 25 Indian crude oil consumption Hydro electric 4.6 Natural Gas 7.1 Renewables 2.2 Nuclear Energy 1.3 2 15 1 5 il 28.3 Coal 56.5 25-6 26-7 27-8 28-9 29-1 21-11 211-12 212-13 213-14* * Provisional Source: BP Statistical Data * Provisional Source: MSPI Crude oil consumption (MMT)
MCX crude oil price & volumes Volume in lots 5 4 3 2 1 ct. 27 ct. 29 ct. 211 ct. 213 ct. 215 8 7 6 5 4 3 2 1 ` / barrel Volume(LHS) MCX Crude oil Price(RHS) Source: Bloomberg Global benchmark crude oil prices USD / Barrel 16 14 12 1 8 6 4 2 ct. 27 ct. 29 ct. 211 ct. 213 ct. 215 Dated Brent WTI Cushing Dubai Fateh Source: Bloomberg MCX is the first exchange in India to launch mini futures contracts in various commodities INDIAN REFINERIES ICL (Mathura, Panipat, Barauni, etc.) BPCL (Mumbai) HPCL (Vizag, Mumbai) CPCL (Manali and Narimanam) MRPL (Mangalore) BRPL (Assam) RPL (Jamnagar) NRL (Numaligarh) KRL (Cochin) ICL is India s largest oil refining company. RPL s Jamnagar refinery is the largest refinery in India and the third largest in the world. The Government of India has permitted foreign participation in oil exploration, an activity restricted earlier to state-owned entities. The petroleum refining and marketing sector is undergoing a huge restructuring with influx of foreign direct investments, thus facilitating more efficient markets in the times to come. PRICE MVING FACTRS PEC output, supply, and spare capacities Increased demand from emerging and developing countries; geopolitics US crude and product inventories data Currency fluctuations Weather conditions Speculative buying and selling Changes in the refining sector; for example, a drop in the refinery utilisation rate MEASUREMENT (AVERAGE GRAVITY) 1 US barrel 42 US gallons 1 US barrel 158.98 litres 1 MT 7.33 barrels Note: The measurement of barrels per metric tonne (MT) varies from origin to origin.
EXCHANGES FACILITATING CRUDE IL FUTURES ICE MCX NYMEX* TCM * CME Group IMPRTANT WEB SITES www.eia.doe.gov www.opec.org www.bloomberg.com www.bp.com www.iea.org SNAPSHT F CNTRACT SPECIFICATINS F CRUDE IL AND CRUDE IL MINI MCXCMDEX, India s first real time composite futures price index, is a market trends indicator SYMBL CRUDEIL CRUDEILM Description CRUDEILMMMYY CRUDEILMMMMYY No. of contracts a year 12 Contract duration TRADING Trading period Trading session 6 months Mondays through Fridays # Monday to Friday: 1: a.m. to 11:3 p.m. / 11:55 p.m. Trading unit 1 barrels 1 barrels Quotation/Base value Maximum order size Tick size (minimum ` 1 price movement) Daily price limits Price quote Initial margin Additional and/or special margin Maximum allowable open position* DELIVERY Delivery unit Delivery center(s) QUALITY SPECIFICATINS # US daylight saving timings. ` / barrel 1, barrels The base price limit will be 4%. Whenever the base daily price limit is breached, the relaxation will be allowed upto 6% without any cooling off period in the trade. In case the daily price limit of 6% is also breached, then after a cooling off period of 15 minutes, the daily price limit will be relaxed upto 9%. In case price movement in international markets is more than the maximum daily price limit (currently 9%), the same may be further relaxed in steps of 3%. and inform the Commission immediately. Ex-Mumbai (excluding all taxes, levies, and other expenses) Minimum 5% or based on SPAN, whichever is higher In case of additional volatility, an additional margin (on both buy side and sell side) and / or special margin (on either buy side or sell side) at such percentage, as deemed fit, will be imposed in respect of all outstanding positions. For individual clients: 4,8, barrels or 5% of the market wide open position, whichever is higher For a member collectively for all clients: 48,, barrels or 2% of the market wide open position, whichever is higher 5, barrels with +/ 2% tolerance limit Port installation at Mumbai / JNPT Port Light Sweet Crude il confirming to the following quality specifications is deliverable: Sulphur:.42% by weight or less API gravity: Between 37 degrees - 42 degrees All volumes are defined at 6 degrees Fahrenheit. Note: Please refer to the exchange circulars for latest contract specifications * Genuine hedgers having underlying exposure that exceed the prescribed I limits given in the contract specifications can be allowed higher limits based on approvals.
SNAPSHT F CNTRACT SPECIFICATINS F BRENT CRUDE IL MCX has strategic alliances with several exchanges of the world SYMBL Description No. of contracts a year 12 Contract duration TRADING Trading period Trading session Trading unit Quotation/Base value Maximum order size Tick size (minimum ` 1 price movement) Daily price limits Price quote Initial margin Special margin Maximum allowable open position* DELIVERY Delivery unit Delivery center(s) BRCRUDEIL BRENTCRUDEMMMYY 3 months Mondays through Fridays # Monday to Friday: 1: am to 11:3 pm / 11:55 pm 1 barrels ` / barrel 1, barrels The base price limit will be 4%. Whenever the base daily price limit is breached, the relaxation will be allowed upto 6% without any cooling off period in the trade. In case the daily price limit of 6% is also breached, then after a cooling off period of 15 minutes, the daily price limit will be relaxed upto 9%. In case price movement in international markets is more than the maximum daily price limit (currently 9%), the same may be further relaxed in steps of 3%. and inform the Commission immediately. Ex-Mumbai (excluding all taxes, levies, and Freight) Minimum 5% or based on SPAN, whichever is higher In case of additional volatility, an additional margin (on both buy side and sell side) and / or special margin (on either buy side or sell side) at such percentage, as deemed fit, will be imposed in respect of all outstanding positions. For individual clients: 4,, barrels or 5% of the market wide open position, whichever is higher For a member collectively for all clients: 4,, barrels or 2% of the market wide open position, whichever is higher 5, barrels with +/ 2% tolerance limit Port installation at Mumbai / JNPT Port QUALITY SPECIFICATINS Brent Blend confirming to the following quality specifications is deliverable: # US daylight saving timings. API gravity: Between 38 degrees - 39 degrees Sulphur:.4% by weight or less Note: Please refer to the exchange circulars for latest contract specifications * Genuine hedgers having underlying exposure that exceed the prescribed I limits given in the contract specifications can be allowed higher limits based on approvals. Customer Support: +91-22-6649 44 To get the latest futures prices on mobile: visit http://m.mcxindia.com This product leaflet is not intended as professional counsel or investment advice, and is not to be used as such. While the exchange has made every effort to assure the accuracy, correctness and reliability of the information contained herein, any affirmation of fact in the product leaflet shall not create an express or implied warranty that it is correct. This product leaflet is made available on the condition that errors or omissions shall not be made the basis for any claims, demands or cause of action. MCX shall also not be liable for any damage or loss of any kind, howsoever caused as a result (direct or indirect) of the use of the information or data in this product leaflet. Multi Commodity Exchange of India Limited Exchange Square, Suren Road, Chakala, Andheri (East) Mumbai 4 93, Tel. no.: +91-22-6731 8888 Email id: info@mcxindia.com,website: CIN: L5199MH22PLC135594 31115